The Dow Jones Industrial Average and Nasdaq Composite rose moderately while the S&P 500 index struggled on Thursday as investors turned more cautious after the blue-chip index broke through an important psychological milestone in the previous session.
Wall Street has mostly rallied since the U.S. election in early November as investors bet President Donald Trump would be an advocate for policies, including massive corporate tax cuts and deregulation, that would accelerate economic growth.
While the upside momentum has shown some signs of slowing of late, a round of positive corporate results on Wednesday gave credence to the idea that market levels were justified by economic fundamentals. That helped lift the Dow above 20,000 for the first time in its history. Although that level holds no fundamental or technical significance, it was seen as psychologically important, and closing above it could signify growing optimism.
Read: President Trump cheers Dow 20,000 as only he can
The prevailing view among investors is that if earnings are upbeat, that is a positive. And even if results disappoint, they can look further into the future for the tax cuts and pro-growth policies promised by President Trump, said Ian Winer, director of equity trading at Wedbush Securities.
"The market is in the mind-set now of heads I win, tails you lose," said Winer.
The Dow Jones Industrial Average DJIA, +0.16% rose 45 points, or 0.2%, to 20,113. The S&P 500 index SPX, -0.07% slipped less than a point to 2,298, after successfully testing 2,300 intraday.
Consumer-discretionary shares led S&P 500 sector gainers, led by a 9% jump in Royal Caribbean Cruises Ltd. RCL, +9.09% while Charter Communications Inc. CHTR, +7.36% surged on news that Verizon Communications Inc. VZ, -1.33% is exploring acquiring the cable company.
The Nasdaq Composite Index COMP, -0.02% added 5 points, or 0.1%, to 5,661.
"We may have gone too far too fast, but we're fairly valued, not over or under," said Mark Foster, chief investment officer at Kirr Marbach & Co., an investment advisory firm. "We need to see earnings come through, but we are starting to see that, and on top of that we have a new administration that is offering tax and regulatory relief, which is making people feel better about the market."
Of the 120 S&P 500 companies that have released quarterly results so far, 78% are beating earnings estimates by a median of 5% while 57% are beating revenue forecasts by an average of 3%, according to data from Fundstrat.
Read: This chart says the bull market has years left to go
Trump’s border wall order shakes up U.S.-Mexico relations
President Donald Trump signed an executive order on Wednesday calling for a wall on the U.S. border with Mexico, the same day Mexican officials met with members of Trump's inner circle. Mexico's President Enrique Peña Nieto released a video saying Mexico would not pay for any wall. Photo: Getty
News that President Enrique Peña Nieto of Mexico has canceled a summit scheduled for next week with President Trump hasn’t impacted U.S. stocks although the Mexico peso MXNUSD, -0.544716% slid 0.6%.
Economic news: In the latest economic data, the number of Americans who applied for unemployment benefits climbed by 22,000 to a one-month high of 259,000 in late January, but the level of layoffs remained extremely low.
There were no Federal Reserve speakers on tap as the central bank is in its so-called blackout period ahead of its policy-setting meeting on Jan. 31-Feb. 1.
Read: Dow hitting 20,000 is a reminder that it's the best active fund ever fashioned
Stock movers: Shares of eBay Inc. EBAY, +5.03% jumped more than 5% after the e-commerce company late Wednesday reported solid earnings from its holiday quarter.
On a downbeat note, Qualcomm Inc. QCOM, -5.01% fell 5.7% after the chip maker late Wednesday issued a weak second-quarter outlook amid ongoing legal and regulatory challenges.
U.S.-listed shares of Diageo PLC DEO, +3.22% climbed 3.3% after the maker of Johnnie Walker whiskey and Smirnoff vodka said half-year profit rose to £1.51 billion ($ 1.9 billion).
Shares of Dow Chemical Co. DOW, +2.03% gained 1.6%. The chemicals giant posted adjusted earnings well ahead of forecasts.
Ford Motor Co. F, -3.21% fell 3.1% after the car maker reported a loss of $ 800 million in the fourth quarter.
Comcast Corp. CMCSA, +2.83% rose 2.8% following better-than-expected earnings.
Shares of Mattel Inc. MAT, -17.65% tanked 17% after disappointing quarterly results late Wednesday.
Johnson & Johnson JNJ, -0.84% agreed to buy Actelion Pharmaceuticals Ltd. ATLN, +19.44% Europe's biggest biotech company, for $ 30 billion. Actelion shares jumped 20% in Zurich.
After the closing bell, Google parent Alphabet Inc. GOOG, -0.42% GOOGL, -0.33% Intel Corp. INTC, -0.63% Starbucks Corp. SBUX, -0.41% and Microsoft Corp. MSFT, +0.94% are expected to release results.
Other markets: Major Asian stock markets closed higher across the board, boosted by optimism over the Dow average reaching 20,000.
Markets in Europe also rose, helping the Stoxx Europe 600 index SXXP, +0.25% end at its highest close since December 2015.
Read: From unloved to favorite: Why European bank earnings are set to cheer investors
Oil prices CLH7, +2.05% LCOH7, +2.14% while a stronger dollar DXY, +0.56% pressured gold GCF7, -0.98%
—Sara Sjolin contributed to this article
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