Dow, S&P 500 climb to record highs

NEW YORK Stocks enjoyed a record-setting day, with both the Dow Jones industrial average and Standard & Poor's 500 closing at all-time highs on expectations that the Federal Reserve will keep its economic stimulus program in place.

Following a 16-day partial shutdown of the U.S. government, economists are doubtful that the Fed will begin winding down its $85 billion monthly bond-buying program until at least next year.

The Dow Jones industrial average rose 111 points, or 0.7 percent, to close at 15,680, just topping the previous high of 16,677 on Sept. 18. It got a boost from IBM, which announced that it would increase the purchases of its own stock by $15 billion.

The S&P 500 index also hit a new high, gaining 10 points to 1,772. The index has closed in record terrain seven days this month. The Nasdaq composite added 12 points to 3,952.

The budget showdown in Washington rattled consumer confidence and likely crimped economic growth.

"The reduction of their bond buying seems to be moving off to be a 2014 event," said Cam Albright, director of asset allocation at Wilmington Trust Investment Advisors.

• Outside drop in autos, U.S. retail spending rises
• Housing slowdown steals wind from recovery
• Stagnant worker pay stunts U.S. recovery

The Fed's policy is aimed at keeping long-term interest rates low. That benefits U.S. companies by helping them to borrow cheaply and increase their earnings. The program has also helped push the stock market to record highs.

About half the companies in the Standard and Poor's 500 have reported earnings. So far, most are doing better than investors expected. Companies in the index are forecast to log third-quarter earnings growth of 4.5 percent, according to data from S&P Capital IQ.

The Nasdaq Stock Market was hit with a technical problem earlier in the day. Nasdaq indexes weren't updated from 11:53 a.m. to 12:37 p.m. because of a technical problem that was caused by "a human error," the exchange operator said in a statement. Trading of Nasdaq-listed stocks wasn't affected, it said

The technical glitch was the latest to hit the Nasdaq.

On Sept. 4, the Nasdaq had a brief outage in one of its quote dissemination channels, which are used to provide real-time price quotes on stocks, but trading wasn't affected. On Aug. 22 the exchange suffered a three-hour trading outage that was also attributed to problems with the exchange's price disseminating system.

Lackluster reports on U.S. retail sales and consumer confidence couldn't slow stocks on Tuesday.

Retail sales fell 0.1 percent in September, the weakest showing since March, as auto sales dipped.

Americans' confidence in the economy fell this month to the lowest level since April. People were worried about the impact of the government shutdown.

The sluggish growth reflected in the two reports encouraged some investors. The Fed is unlikely to cut back on its stimulus if the economy is struggling to take off.

"The data that has been the most attractive to (stock) markets seems to be the data that maintains the status quo," said Brad Sorensen, the director of market and sector analysis at the Schwab Center for Financial Research.