Dow Jones climbs further into record territory

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NEW YORK (CNNMoney) — One day after hitting an all-time high, the Dow continued to tread higher Wednesday, as investors welcomed signs of strength in the U.S. job market.

The Dow Jones industrial average was up 0.1%, while the S&P 500 was flat. The Nasdaq fell 0.1% as shares of Staples weighed on the index. The office supply retailer cut its outlook for sales this year.

Ahead of the opening bell Wednesday, a report from payroll processing firm ADP showed that private-sector employment increased by 198,000 jobs in February, much better than the expected increase of 150,000.

On Tuesday, a triple-digit rally pushed the Dow to a record close of 14,253.77. The S&P 500 finished at its highest level since October 2007 and is now only about 1.3% away from its record closing high.

The rally has been driven by improved economic data, said Bill Stone, chief investment strategist for PNC Wealth Management.

“There’s more and more confidence that the economy is on firmer footing,” he said. “It’s not growing fast, but it’s not about to fall off a cliff either.”

But Stone cautioned that recent readings on investor sentiment have been mixed, suggesting the market could be headed for a pullback.

“There is some concern that its precarious because we’ve come so far so fast,” he added.

The Dow has gained 9% so far this year, while the S&P 500 is up more than 8%.

Meanwhile, the market has also been supported by the Federal Reserve’s stimulus measures, which have pushed interest rates down and made stocks more attractive.

“The world has seen fairly big divergences in recent years and the U.S. is leading the pack in the recovery due to extraordinary levels of fiscal and monetary stimulus,” wrote Deutsche Bank strategist Jim Reid, in a research note.

Whether the recent momentum will hold is anybody’s guess. But investors looking for guidance about the what’s coming next will have several economic reports to consider going forward.

The strong payroll report from ADP could foreshadow a larger-than-expected increase in the government’s monthly jobs report on Friday, said Alan Levenson, an economist at T. Rowe Price. Economists surveyed by CNNMoney expect the Labor Department to report an increase of 175,000 jobs.

Also, at 2 p.m. ET Wednesday, the Federal Reserve will release its Beige Book report on economic conditions.

In corporate news, office supply company Staples reported a 3% increase in fourth-quarter sales but trimmed its outlook. That sent shares down about 6%.

Shares of Hovnanian fell 6% after the homebuilder said it lost $11.3 million, or 8 cents per share, in the most recent quarter. That was worse than expected. Despite the latest results, Hovnanian said it expects to return to profitability this year.

Also, the European Union fined Microsoft €561 million, or about $730 million, for failing to provide users of Windows 7 with a choice of Internet browser.

Shares of Smith & Wesson declined, despite the gunmaker’s strong third quarter earnings.

JC Penney’s shares extended Tuesday’s decline on news that one of its biggest shareholders dumped 40% of its stake. The Wall Street Journal also reported that some shareholders may start pushing for a new CEO if sales continue to slide.

The struggling retailer is in the third week of a court battle with Macy’s, which claims that Martha Stewart Living Omnimedia violated a previous agreement by entering into a new partnership with J.C. Penney.

South Korean electronics company Samsung agreed to take a 3% stake in Japanese company Sharp.

European markets advanced in morning trading, with indexes at their highest points in more than a year, led by Germany’s DAX index. Asian markets ended higher. The Shanghai Composite added 0.9%, the Hang Seng increased 1.0% and Japan’s Nikkei rose 2.1%.

Oil prices were down slightly as the U.S. dollar strengthened.

Analysts say the death of Venezuelan leader Hugo Chavez will not impact the nation’s oil production.

Gold prices edged higher.

The yield on the 10-year Treasury note rose to 1.93% from 1.89% on Tuesday.