Dow to rise higher after hitting record

A strong market rally lift the Dow Jones Industrial Average Index to a new all-time high on Tuesday, as investors'confidence and risk appetite kept growing amid improving global economy.

Although some traders were surprised by the premature coming of the Dow's new peak, most of them believed a rosier U.S. and global economic picture and the Fed's massive quantitative easing stoked investors' optimism and made the market ripe for the historical moment.

Dow sets new record high

The Dow Tuesday surged 125.95 to 14,253.77, well above its previous all-time closing high of 14,164.53 set on Oct. 9, 2007. Minutes after the opening bell, the blue-chip index scored a new all-time intraday high at 14286.37, surpassing its previous record of 14198.10 set on Oct. 11, 2007.

Meanwhile, the S&P 500 Index soared 14.59 points, or 0.96 percent, to 1,539.79, only 1.6 percent lower than its historical high. The tech-rich Nasdaq Composite Index rose 42.10 points, or 1.32 percent, to 3,224.13.

Jason A. Weisberg, senior trader at Seaport Securities, told Xinhua that he can guarantee that the Dow will reach 15,000 and higher by the end of this year and the S&P 500 will rose to around 1,580.

"The market has absorbed every piece of negative information it can possibly get thrown at, the sequestration, unemployment numbers, and bad GDP numbers, to name just a few," Weisberg said.

Rally Fueled by Fed's stimulus, economy and Buffett

Tuesday's rally came one day after Warren Buffett's optimistic comments on stocks on CNBC. Buffett, the so-called "Oracle of Omaha" and chairman and CEO of Berkshire Hathaway Inc., said his company is still buying stocks although stock prices were higher than four years ago.

"You get more for your money" compared to other forms of investments,Buffett said, adding that "we are getting good value for them."

Besides Buffett's huge influence on investors' sentiment, the Fed's and global central banks' easing monetary policy, stable and modest economic recovery around the globe as well as outstanding performance of U.S. companies laid foundation for Dow's new record high.

A number of Fed's top officials recently have expressed support for sustaining the massive asset-purchases plan at a pace of 85 billion U.S. dollars per month.

In his testimony to Congress late last month, Fed Chairman Ben Bernanke said that the risk of extended quantitative easing was outweighed by potential benefits to the economy in view of the moderate but uneven U.S. economic recovery and an improving but weak labor market.

Fed's Vice Chair Janet Yellen on Monday also defended the central bank's quantitative easing, leading most analysts to predict that the Federal Open Market Committee is not likely to weaken or end the QE3 at its March meeting on Thursday.

"The Fed stands ready. They are not going to let the market pull back," Kenneth Polcari, director of NYSE Floor Operations at O'Neil Securities, told Xinhua.

In a technical perspective, the Dow has been teasing with its high during the past one-and-a-half weeks and people could feel the momentum to build up, Polcari said. When the blue-chip index closed Monday within 0.3 percent to break its record, what it needed was nothing but a reason to hit the peak level, he added.

Good news overnight from China and Europe was enough to create the momentum. The European stock market surged to a more than four-and-a-half-year high on better-than-expected eurozone's retail sales in January and revised-up figure of Markit Eurozone Composite Output Index in February. While China's Shanghai Composite Index bounced up 2.3 percent Tuesday on government's prediction of a 7.5-percent growth target for 2013.

Another major reason for the Dow's rally is U.S. companies' strong performance since the fourth quarter of 2012 and the increasingly active mergers and acquisitions so far this year.

"The market was here in 2008 when the U.S. was built on house of cards. Five years later, the stock market is where it is and the foundation of all of corporate America is stronger than it has ever been," Weisberg said.

According to Thomson Reuters' latest data, fourth-quarter earnings for the S&P 500 Index companies are projected to have risen 6 percent, above a 1.9-percent forecast at the beginning of the earning season.

Also attributable to the rally are momentum players, or those automated computerized traders who chased the market momentum up, according to Polcari.

Ready for a new leg of rally?

Is the market ready for a new leg of rally or a ceiling? Wall Street traders posted mixed views toward the trend of the market.

According to the CNBS's Street Poll, 51 percent of respondents predicted the market would go higher, while 49 percent said the stocks would be lower.

While traders like Weisberg stood on Buffett's side saying investors are "absolutely not" too optimistic at the moment and suggested it would still be wise to buy stocks, other traders took a more cautious optimistic view.

With regard to the U.S. government's sequester stalemate and debt ceiling and funding problems over the next couple of months, Polcari said the market will keep churning and the Dow may come back down to what was its resistance and now support at around 14,164.

But toward the end of the year, most traders are deeply convinced the market is going to do better because the U.S. economy will keep improving.

"Long term, when you have such a smart investor like Warren Buffett believing in the value of stocks right now, I think that is pretty tough to ignore," Gregory J. Keating, managing director of New York-based James E. Coffey Securities Inc, told Xinhua.

"As long as the Fed keeps stimulating, the music is playing and you've got to dance," Polcari said.