Dow Extends Record Highs

NEW YORK (TheStreet) -- Major U.S. stock averages were higher late Thursday afternoon, with the Dow Jones Industrial Average progressing further into record territory after a better-than-expected ADP employment report.

Volumes were thin, however, and the Nasdaq was wavering between negative and positive territory.

The Dow closed at a record high on Tuesday, marking a new peak in a four-year rally that began in March 2009 at the depth of the financial crisis, helped in part by global central bank stimulus and S&P 500 companies largely exceeding earnings and revenue estimates.

Michael Gayed, chief investment strategist of Pension Partners and co-portfolio manager of the ATAC Inflation Rotation Fund, said that while it feels exciting to see the Dow hitting new all-time highs, "there are a number of notable disconnects which make such euphoria vulnerable to ending."

Gayed pointed out that for the past several weeks, numerous areas within and across markets have been behaving in a defensive manner, and divergences are occurring in multiples places at once.

The Russell 2000 Index, for example, has not hit new all time-highs, lagging large-cap stocks recently.

"This may be a tell on future direction given that the Russell 2000 consists of high beta small-cap names," Gayed warned. "Everyone looking at the Dow level is no different than everyone focusing on a basketball being passed around while an invisible Gorilla walks across our screens."

The Dow Jones Industrial Average was rising more than 28 points, or 0.2%, at 14,281.88.

Breadth was positive, with winners outnumbering losers 21-9. Alcoa(AA) , Hewlett-Packard(HPQ) , Bank of America(BAC) and Cisco(CSCO) were the biggest percentage blue-chip gainers.

Microsoft(MSFT) , Verizon Communications (VZ) and Caterpillar(CAT) were among the sharpest decliners.

Microsoft shares were sliding 0.49% after the European Union fined the company €561 million ($732.2 million) for failing to offer consumers a choice of Web browser.