The Dow Jones transports closed at an all-time high on Thursday, leading U.S. stocks higher and signaling more gains due to its role as a touchstone of economic demand.
Investors had expectations for strong gains after the S&P 500 broke through resistance at 1,344 on Tuesday. However, with volume weak and economic data suggesting a still unsteady path to recovery, it raises questions as to how fast the S&P can surpass the next milestone at 1,400.
"There is a disconnect in the market right now -- we are getting this mixed bag of news," said Jonathan Corpina, head of NYSE floor operations for Meridian Equity Partners in New York.
There were also some signs of creeping cost pressures in some companies' results. Procter & Gamble Co (NYSE:PG - News) lowered the high end of its profit forecast as it trimmed expenses and increased prices to offset rising materials costs. Its shares were up 0.8 percent at $64.50.
Earnings eased the blow from a batch of soft economic data showing U.S. economic growth had slowed and the labor market may be weakening.
But the U.S. Federal Reserve has maintained support for its easy monetary policy, which has helped push up equity prices in the face of increasing inflation.
"As operating costs continue to move higher across the board, that is clearly going to affect the bottom line moving forward," Corpina said.
"Seeing commodity prices, oil and energy prices at the rate they are trading at now, with no end in short-term sight, that has to be factored in, going into the next quarter or two."