Stocks Take a Breather - NYTimes.com Stock market indexes were slightly higher on Wall Street on Wednesday, a day after stocks posted their biggest gains of the year. The Dow Jones industrial average closed at its highest level since 2007 on Tuesday - within 1,000 points of its record - after a day of encouraging signs for the economy: retail sales were strong, the Federal Reserve was optimistic and most of the nation's biggest banks got a clean bill of health. The Nasdaq composite index also reached a milestone on Tuesday, closing above 3,000 for the first time since December 2000. In early trading Wednesday, the Standard & Poor's 500-stock index, the Dow and the Nasdaq all were 0.2 to 0.3 percent higher. Bank stocks continued to gain after surging Tuesday. JPMorgan Chase added 29 cents, or 0.6 percent, after leaping 7 percent on Tuesday. Bank of America shares added 32 cents, or 3.7 percent, after Tuesday's 6.3 percent gain. Citigroup, which also jumped more than 6 percent Tuesday, fell 50 cents, or 1.4 percent, after being one of the four major banks that failed part of the Fed's annual "stress tests." The bank rally started Tuesday when JPMorgan Chase said it was raising its dividend and beginning a $15 billion stock-buyback program, all with the blessing of the Fed. The Fed was planning to wait until Thursday to release the results of its stress tests, which determine those healthy enough to raise their dividends. After JPMorgan's announcement, the Fed released the results early. The Fed's action was the latest sign that the American financial system was getting healthier. "That's what really made the day," said Jeffrey Kleintop, chief market strategist at LPL Financial. Banks were easily the best-performing stocks in the market, gaining almost 4 percent as a ground. Brian Gendreau, market strategist at Cetera Financial, said stocks could still go higher. Investors are paying roughly 14 times the past year's earnings for the S.&P. 500 index. The long-term average is closer to 15. "Valuations are still very cheap," he said. The S.&P. is a 12 percent rally from its record of 1,565.15. In Europe, the DAX index in Germany gained 1.3 percent, the CAC 40 in France rose 0.8 percent and the FTSE index of 100 British stocks gained 0.5 percent.