The Dow Jones Industrial Average rose for a fourth straight session on Tuesday, logging its 14th record close of 2018, even as the broader market fell on lingering trade worries.

But the market’s recent strength on the back of a robust domestic economy underscored the divergence in U.S. stocks versus global equities as concerns over a variety of potentially disruptive events abroad prompted investors to focus on the U.S.

The Dow DJIA, -0.31% climbed 122.73 points, or 0.5%, to finish at 26,773.94. The blue-chip average hit an all-time intraday high of 26,824.78, supported by gains in major industrial stocks like Caterpillar Inc. CAT, -0.55% and Intel Corp. INTC, -0.90% .

However, the broader S&P 500 SPX, -0.68% slid 1.16 points to 2,923.43 as consumer discretionary stocks lost 1.4% and the Nasdaq Composite Index COMP, -1.11% shed 37.75 points, or 0.5%, to 7,999.55.

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The Russell 2000 index RUT, -0.45% of small-capitalization shares declined 1.1% to 1,654. The recent underperformance by small stocks compared with large ones has been cited as a potential warning sign for the market’s future prospects.

What drove trading?

The gains in industrial stocks suggest that some investors are able to ignore concerns over trade as the sector has a high correlation to the issue.

On Monday, the U.S. and Canada unexpectedly reached a deal to revise the North American Free Trade Agreement. Many took that as a sign of progress but there are also outstanding differences in U.S.-China trade relations, which is considered a bigger factor for markets.

However, White House officials are betting that concluding a trade deal with Mexico and Canada will give them more ammunition in their high-stakes battle with China.

Trade is still seen as a factor that can weigh on the global economy. International Monetary Fund chief Christine Lagarde delivered a warning on global growth that placed much of the blame on trade worries. In her comments, Lagarde said there were signs major economies such as the U.S. had ”plateaued.”

In another potential risk factor for stocks, Italy last week unveiled a 2019 budget deficit target that has met stiff opposition from European Union officials, who say it will violate the bloc’s fiscal rules. Italian and EU officials continue to bicker, with Rome refusing to back down, sending Italian bond yields higher.

See:For Italy, the euro is ‘unrenouncable,’ its prime minister reassures

In the U.K., the Conservatives’ annual party conference was under way with Prime Minister Theresa May facing pressure over her proposal for future U.K.-EU relations, known as the Chequers plan, which has already been rejected by EU leaders. Any additional signs of political instability in Europe could weigh on the U.S., where multinational firms have a large amount of revenue exposure to the region.

Read:Stock investors ask, can the U.S. stay afloat while the rest of the world sinks?

Federal Reserve Chairman Jerome Powell reiterated that he did not see signs that inflation could spike despite the low unemployment rate. “Many factors, including better conduct of monetary policy over the past few decades, have greatly reduced…the effects that tight labor markets have on inflation,” Powell said in a speech to the National Association for Business Economics.

The comments come just days after the Fed raised rates for the third time this year and indicated it would do so again in December.

On the economic data front, September car sales will be released throughout the morning.

What were analysts saying?

“U.S. stocks outperformed most other asset classes—including government and corporate bonds, cash, and gold—for the month, the quarter, and year-to-date,” wrote Savita Subramanian, equity and quant strategist at Bank of America Merrill Lynch, in a Tuesday report. “Similarly, within equities, large cap U.S. stocks outperformed other regions in third quarter amid escalating trade tensions and EM concerns.”

So far this year, the S&P 500 is up 10.6% on a total return basis this year versus a 2.7% decline for the rest of the world, she said.

“U.S. stocks are mixed with the global markets looking past yesterday’s trade agreement with Canada, as the U.S./China relationship remains contentious,” Charles Schwab analysts said in a report. “Records in the U.S. stock market do not, in our view, mean that investors should get more aggressive in their investment stance. High expectations, elevated investor sentiment, trade disputes, and the possibility of a monetary mistake lead us to take a more cautious stance.”

What stocks were in focus?

PepsiCo Inc. PEP, -1.01% reported third-quarter earnings and revenue that beat expectations. The stock fell 1.8% as it also warned about the strength of the U.S. dollar.

Amazon.com Inc. AMZN, -2.01% shares fell 1.7%. The giant online retailer said it was raising its minimum wage to $15 an hour for all U.S. employees, effective Nov. 1.

Stitch Fix SFIX, -15.77% tumbled 35% after it late Monday reported fourth-quarter earnings that beat expectations, though revenue was slightly under forecasts and it missed estimates for active clients, considered a key metric for subscription-based companies.

Tesla Inc. TSLA, -8.76% fell 3.1% following strong gains on Monday. The electric car maker said it produced 53,239 Model 3 vehicles, in line with its target, and beat delivery expectations for the third quarter.

Facebook Inc. FB, -1.07% extended losses, falling 1.9% after an analyst at Deutsche Bank said advertisers are cautious about the company given the recent data breach.

What were other markets doing?

Stock markets in Asia traded lower, with trade tensions between the U.S. and China once again acting as a headwind. Major European indexes also fell.