NEW YORK (USA TODAY) -- The Dow Jones industrial average gained 0.6% to closeabove 15,000 for the first time ever on Tuesday as stocks' long upwardclimb continued. The S&P 500, which gained 0.5% on the day, also hada record close.

Rob Lutts, chief investment officer at CabotMoney Management, says investors are reacting to a slow but steadyimprovement in the U.S. economy and he expects more gains ahead.According to his calculations, the market is 15% undervalued, Luttssays.

"Thebasic underlying foundation of the economy is a lot stronger than manypeople believe," says Lutts, adding that the economy is getting a bigboost from the rebounding housing market and the nation's increasingpush to become more energy efficient.

The fact that manyinvestors, both on Main Street and institutional investors, remainunderweight in stocks is also a plus, as it means the market shouldcontinue to get fresh flows of cash as investors look to take part inthe rally and exit conservative assets that are yielding little ifanything at all.

Lutts balks at talk that the market's new highs are a sign that it can't rise much more.

"Thestock market is essentially back where it was 12 or 13 years ago," hesays. "And when you look at it that way, you could have some goodcatch-up in performance."

Overseas Tuesday, Japanese stocksoutperformed all others as traders returned from a public holiday inbuoyant mood, sending the Nikkei stock index above 14,000 for the firsttime in nearly five years.

The Nikkei surged 3.6% to14,180.24 on its first day of trading following the Golden Week holiday -that's the first time the Nikkei has breached the 14,000 mark sinceJune 2008.

Japanesestocks have been marked up heavily after the Bank of Japan announced anew aggressive monetary policy to get the country out of its neartwo-decade stagnation. One repercussion of the plan to pump huge amountsof yen into the Japanese economy has been to sharply weaken thecurrency. A lower yen is boosting economic growth by making thecountry's exports cheaper in international markets.

Elsewhere,investors remained largely positive amid a dearth of scheduled economicand corporate news, as they continued to draw encouragement fromFriday's better than anticipated U.S. payrolls figures. The data oftenset the market tone for a week or two after their release.

InEurope, the FTSE 100 index of leading British shares as up 0.3% at 6,540while Germany's DAX rose 0.6% to 8,164. The CAC-40 in France was 0.4%higher at 3,921.

"Wall Street may be eyeing a relativelyunchanged start to Tuesday, but there's no denying the current levelsremain bullish and the fact the S&P is holding above 1,600 iscertainly worthy of note," said Fawad Razaqzada, market strategist atGFT Markets.

The dollar was also fairly steady aftergaining in the wake of the payrolls data. The euro was flat at $1.3075while the dollar was 0.2% lower at 99.19 yen.

Earlier in Asia,Hong Kong's Hang Seng rose 0.6% to 23,047.09, while South Korea's Kospifell 0.4% to 1,954.49 . Mainland Chinese shares were higher. TheShanghai Composite Index gained 0.2% to 2,235.58 and the smallerShenzhen Composite Index added 0.1% to 955.33.

Australia was infocus after the Reserve Bank of Australia lowered its official interestrate by a quarter percentage point to 2.75% amid some signs the economyis coming off the boil as the Australian dollar rises. Following thereduction, the Aussie dollar fell 0.9% to $1.0169. However, theS&P/ASX 200 stock index fell 0.2% to 5,143.70.

Oil prices drifted lower after a strong run, with the benchmark New York rate down 63 cents at $95.53 a barrel.

OnMonday, U.S. stocks ended mixed. The Dow fell less than 0.1% to14,968.89. The S&P 500 rose 0.2% to 1,617.50. The Nasdaq compositeindex rose 0.4% to 3,392.97.