The Dow Jones industrial average closed at a record high Tuesday after reports on auto sales and factory orders provided the latest evidence the U.S. economy is strengthening. Traders plowed money back into European stocks as the financial situation in Cyprus appeared to stabilize.
Health insurers powered the gains a day after the government released revised reimbursement rates for Medicare Advantage plans. The new numbers suggest funding cuts will be less severe than analysts and companies had feared.
The Dow closed up 89.16 points, or 0.6 percent, at 14,662.01. It had risen as high as 14,684 in the late morning.
The Dow broke through an all-time record on March 5. It has risen steadily since then, routinely setting new trading highs.
The Standard & Poor’s 500 index rose 8.08 points, or 0.5 percent, to 1,570.25. It rose to within two points of its trading high of 1,576 reached on Oct. 11, 2007.
European markets closed sharply higher on the first trading day after a tense, four-day holiday weekend. Paris’ CAC-40 rose 2 percent, London’s FTSE 100 1.2 percent and Frankfurt’s DAX 1.9 percent.
The gains in European markets boosted confidence among U.S. investors. While European markets were closed for four days for the Easter holiday, many traders feared Cyprus’ precarious financial situation would worsen. That concern also weighed on U.S. markets Monday, said Peter Tchir, who runs the hedge fund TF Market Advisors.
The trading day began with solid March sales reports from U.S. automakers. Chrysler said it sold more cars and trucks than in any month since the Great Recession began, an increase of 5 percent. Sales for General Motors and Ford rose 6 percent.
U.S. factory orders rose 3 percent in February, the best gain in five months, the government said after trading began. The increase was driven by a surge in demand for commercial aircraft, an especially volatile category.
Health care stocks rose the most of the 10 sectors in the S&P 500 index, adding 1.4 percent. The sector is up 17.1 percent this year.
Traders were relieved about the insurers’ prospects after Monday’s news about Medicare Advantage rates. Preliminary data released in February had raised fears companies offering the plans would be forced to cut benefits, increase customers’ premiums or abandon some markets. This week’s data suggest that may not be necessary.