U.S. stock indexes pause after record run

U.S. stocks veer between small gains and losses on Tuesday following a seven-session winning run that had the Dow Jones Industrial Average closing at another all-time high.

NEW YORK (MarketWatch) — U.S. stocks were little changed on Tuesday following a seven-session winning run that had the Dow Jones Industrial Average hitting an all-time high.

“This is the 24th bull market since 1890, and the Dow Jones Industrial Average has gone to a new high in 14 of those 24, so it’s not unusual for the Dow to set a new high,” said Hugh Johnson, chairman of Hugh Johnson Advisors LLC in Albany, N.Y.

“It is a little surprising from the point of view of valuation. We did more in three months than I thought we would do in a year,” he added.

The Dow  was up 3.37 points at 14,450.66.

The S&P 500   shed 1.09 point to 1,555.13, with the industrial sector hardest hit and energy faring best among its 10 industry groups.

The Nasdaq Composite  declined 3.91 points, or 0.1%, to 3,248.89.

For every two stocks rising three fell on the New York Stock Exchange, where 77 million shares traded as of 9:55 a.m. Eastern.

The CBOE Volatility Index ended Monday down 8.2% to 11.56, its lowest level since February 2007. The gauge of investor uncertainty is down 36% year to date after a brief surge earlier this month.

The Dow Jones Industrial Average posted another record-high close Monday, its fifth in a row as it extended a winning streak to seven sessions. That is the longest string of positive finishes in nearly a year.

The S&P 500 rose 0.3% Monday to close at 1,556.22, just nine points below its record closing high of 1,565.15 from October 2007.

Strategists noted, however, that stocks often prove vulnerable to a downturn when volatility is so low and the S&P is nearing a high. See: Who’s afraid of an S&P 500 triple dip?

The combination of subdued macroeconomic data and strong confidence in equities suggests to some that markets have entered a new phase of “irrational exuberance,” said Oliver Adler, head of economic research at Credit Suisse, echoing the term coined by former Federal Reserve Chairman Alan Greenspan in December 1996.

But Adler argued that other — albeit softer — indicators suggest that such a phase is still some way off. “Media ‘hype’ is remarkably absent, with commentaries more focused on a coming correction than the next big move up,” Adler said in a note. “Most investors seem to be watching markets in disbelief rather than joining in the ‘frenzy.’”

Wall Street started Monday on a negative note, slipping in the wake of weak Chinese data and worries over the continued federal budget impasse. But investors soon proved willing to buy dips.

There are no major economic data set for release Tuesday. The National Federation of Independent Business said its February small business index rose 1.9 points to 90.8% in February, but was still low by historical standards.

Also, a new survey by Manpower said second-quarter hiring intentions in the U.S. remain relatively stable, though globally hiring will remain subdued. Read: Manpower: Global 2nd-quarter hiring to be subdued

House Republicans are expected to introduce a plan Tuesday to cut $4.6 trillion in spending over the next decade, while Senate Democrats are expected to present their own plan on Wednesday that focuses on a mix of tax hikes and spending cuts. See: Ryan budget trims spending by $4.6 trillion.

Automatic spending cuts began to take effect March 1 after politicians failed to come to an agreement to avoid a process known as sequestration. Economists expect the heavy cuts to dampen the recovery unless lawmakers reach a deal on reducing the deficit.

On the corporate front, shares of Costco Wholesale Corp. rose 1.6% after the warehouse retailer reported a 39% rise in fiscal second-quarter net income and an 8.2% rise in net revenue. See: Costco net up 39% on 5% higher comp sales.

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