NEW YORK ( TheStreet) -- The Dow Jones Industrial Average broke its record-high closing for a second-straight day on Wednesday after a better-than-expected ADP employment report.

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

The Dow Jones Industrial Average rose 42.47 points, or 0.3%, at 14,296.24.

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."

Breadth within the Dow was positive as winners outnumbered losers 22-8. 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 slid 0.92% after the European Union fined the company €561 million ($732.2 million) for failing to offer consumers a choice of Web browser.

Verizon shares fell 0.84%. The company is looking to acquire 100% of Verizon Wireless, its joint venture with Vodafone ( VOD), Bloomberg reported. Vodafone shares rose 1.2%.

The S&P 500 increased 1.67 point, or 0.11%, at 1,541.46, heading closer to its all-time intraday high of 1,576.09.

The Nasdaq closed off 1.76 point, or 0.05%, at 3,222.37.

Most sectors in the broader market ticked higher. The biggest gainers were consumer cyclicals, basic materials and energy. The utilities, transportation, healthcare and services sectors dropped.

Volumes totaled 3.65 billion shares on the Big Board and 1.76 billion shares on the Nasdaq. Advancers were edging decliners by a ratio of 1.3-to-1 on the New York Stock Exchange and 1.2-to-1 on the Nasdaq.

Ahead of the nonfarm payrolls report on Friday, the ADP jobs report Wednesday showed a decline in private jobs to 198,000 in February, from an upwardly revised 215,000. Economists expected a fall in private-sector jobs to 170,000.

Meanwhile, the Census Bureau said that factory orders fell 2% in January after rising by a downwardly revised 1.3% in the previous month. On average, economists were expecting a 2.2% decline.

The Fed's Beige Book for March said the U.S. economy had grown across the country, largely due to the improving housing market, auto sales and new hiring.

Gold for April delivery settled unchanged at $1,574.90, while April crude oil futures slipped 39 cents to close at $90.43 a barrel.

The benchmark 10-year Treasury was slipping by 13/32, raising the yield to 1.945%. The dollar was popping 0.5%, according to the U.S. dollar index.

The FTSE 100 in London finished lower by 0.07%, while the DAX in Germany gained 0.62%. Hong Kong's Hang Seng index settled up 0.96%, while the Nikkei Average in Japan jumped 2.13%.

In corporate news, Staples ( SPLS) shares retreated 7.2% after the office products company announced lower-than-expected revenue and gave a disappointing outlook as European, American, and corporate customers reined in their spending.

The company provided full-year earnings guidance of $1.30 to $1.35 a share, with revenue increasing by the low single-digits. Analysts, on average, are forecasting earnings of $1.44 a share. Staples posted fourth-quarter sales of $6.57 billion, compared with the consensus estimate of $6.72 billion.

American Eagle Outfitters ( AEO) shares plunged 10.1% after the specialty retailer forecast first-quarter EPS guidance of 16 cents to 19 cents a share, compared with 22 cents a share last year, saying that macro-economic headwinds and unfavorable weather affected consumer spending in February.

Members of J.C. Penney's ( JCP) board will consider selling the company or replacing Ron Johnson as CEO if a deep drop in sales can't be reversed this year, people familiar with the matter told The Wall Street Journal.

Citi cut its view on the retailer to neutral from buy and slashed its price target on the stock to $15 a share from $22, citing concerns about when the company will return to revenue growth after meeting with executives. Also, Oppenheimer reduced the stock to perform from outperform. Shares shed 3.5%.

Best Buy ( BBY) shares increased 1.9% after the consumer electronics retailer stock was boosted to buy from hold by Jefferies analysts, who are betting on cost-reduction plans by new management and efforts to stabilize the business.

Smith & Wesson ( SWHC), the firearm maker, posted fourth-quarter profit Tuesday of $14.6 million, or 22 cents a share, more than tripling from year-earlier profit of $4.4 million, or 7 cents a share. Revenue jumped 39% to $136 million as consumers bought guns while U.S. lawmakers debated whether to impose a ban on some weapons. Shares tumbled 5.1%.

VeriFone ( PAY) swung to a profit in the first quarter but the maker of terminals for electronic payments said Tuesday it could make senior management changes to "execute our strategic plan going forward." Shares jumped 8.6%.

Big Lots ( BIG) shares added 6.1% after the North American closeout retailer posted stronger-than-expected quarterly results as the company's Canadian operations posted its first profitable quarter since its acquisition in July 2011.

-- Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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