Investors extended the Dow Jones Industrial Average's record-breaking rally to 10 days and took the Standard & Poor's 500-stock index to the brink of its own all-time high.
The Dow industrials rode good news in the labor market to a gain of 83.86 points, or 0.58%. That left the Dow at a record high of 14539.14 and extended a winning streak that has the index without a single losing session so far in March.
The broader S&P 500-stock index climbed 8.71 points, or 0.56%, to 1563.23. A late-day push higher brought the measure to just two points shy of its Oct. 9, 2007 peak.
Such lengthy advances in stock prices without a pullback are rare. Since the end of World War II, the Dow has extended its winning streak beyond 10 days only four times, most recently in January 1992. The longest run ever came in 1897, when the blue-chip measure strung together 14 days of gains.
While some investors have worried the market's rise has gone too far, too fast, previous long-running rallies haven't necessarily ended in tears. When the Dow last strung together 10 days of uninterrupted gains in mid-November 1996, the Dow gained another 10% over the next three months and stood 19% higher in mid-November 1997.
However, just weeks after that 10-day rally ended, then-Federal Reserve Chairman Alan Greenspan warned in a Dec. 5, 1996 speech of "irrational exuberance" in the stock market. After the technology stock bubble burst in March 2000, that remark was seen as a prescient warning.
Market watchers say that with stocks broadly trading at relatively attractive valuations, and renewed interest in buying U.S. stocks among individual investors, there is a growing comfort with the rally. "Ten days is a lot of time for something to not go wrong," says Jonathan Krinsky, chief technical market analyst for Miller Tabak in New York.
However, he sees a change in behavior among investors that supports the rally. Rather than selling outright and moving to the sidelines when they get cautious, and then buying back in when they turn bullish, investors are shifting between aggressive and defensive areas of the market depending on their views.
Thursday's rally built on many of the same factors that have pushed stocks higher since the start of the year. The U.S. economy has been growing, albeit slowly. The Federal Reserve is keeping its foot on the gas with exceptionally easy monetary policy. The resulting low interest rates are pushing investors into riskier assets such as stocks.
Those elements have combined to help the Dow tack on 11% in just 10 weeks, more than some strategists had expected for the year. They also have created a dichotomy between those who were positioned for the rally and those who came into 2013 in a more cautious stance.
"For people that aren't in the market, it's Chinese water torture; for people that are involved, they must enjoy coming to work every day and watching the same stocks continue to go up," said Seth Setrakian, co-head of equity trading at First New York Securities.
If there is a fly in the ointment, trading volumes have been muted over the current 10-day run. Five of the 10 days have seen composite volume on the New York Stock Exchange fall short of the 2013 daily average, while the other days have just barely exceeded the average.
On Thursday, the catalyst was an unexpected drop in jobless claims, which fell to 332,000 for the week of March 9, better than expectations.
Meanwhile, some European stock markets pushed to their highest levels in years, helped by a well-received Spanish government-bond auction. London's FTSE 100 and Frankfurt's DAX index rose to five-year highs. France's CAC-40 climbed to its highest level since July 2011.
Reflecting recent optimism, yields on the benchmark 10-year Treasury note have pushed above 2% in recent days for just the second time this year, suggesting investors are growing more comfortable stepping away from the perceived safety of the U.S. government-backed securities.
The CBOE Market Volatility Indexâthe "fear gauge" known as the VIXâfell to its lowest level in more than six years on Thursday.
Still, many investors haven't fully embraced the idea that it is safe to get back in, says Milton Ezrati, senior economist and market strategist at Lord Abbett in Jersey City, N.J.
On recent client visits in Texas and California, Mr. Ezrati says his conversations have been marked by continued caution.
"Investors are beginning to believe that there is some upside to stocks, but there is still a lot of fear," Mr. Ezrati said. "The most common two words I heard were, 'Yes, butâ¦.'"—Matt Jarzemsky contributed to this article.
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