The Dow Jones Industrial Average finished Monday with an 11th straight day of advances, as investors used the lack of a long-awaited recession to drive up equities ahead of a Federal Reserve rate decision and busy week of corporate earnings.

What happened

What drove the market

The Dow sits at its loftiest level since Feb. 9, 2022 — reflecting a broadening of the rally that had been mainly powered by big technology stocks in recent months. The S&P 500, meanwhile, is 5% away from its record finish of 4,796.56 set on Jan. 3, 2022.

Analysts said the surge reflects hopes that cooling inflation will allow central banks to soon stop their rate-hike campaigns and that any economic downturn caused by the monetary tightening will not impact corporate profits too badly.

"You have a lot of people who have missed this rally and investors are afraid this thing might melt up further,” said James Demmert, chief investment officer of New York City-based Main Street Research, which has roughly $2 billion in assets under management. “The question is, ‘Is this buying correct?’ Investors should recognize that the indexes are vulnerable,” Demmert said via phone. In addition, Monday’s special rebalancing of the Nasdaq 100 is likely to create “some volatility within larger tech names,” particularly those which are seeing their weightings reduced.

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Read this interview also in Morningstar and TD Ameritrade.

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