Dow sets record highs as rally continues

The Dow surged to a new record on Tuesday, breaking through levels last seen in 2007 as investors extended 2013's rally.

Shortly after the opening bell, the Dow rose above 14,198.10, the intraday all-time high reached in October 2007, when the world was heading toward the financial crisis.

If the Dow ends the day at these levels, it will also set a new record closing high, above 2007's 14,164.53.

"This is a classic bull market, climbing the wall of worry," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey.

"We are seeing the ‘great migration.' But it's not the great migration people expected. There's a fear out there that a wave of money will move out of bonds into stocks. But the money will not come from bonds. It will come from cash, the most expensive asset."

Analysts said Tuesday's advance was due less to one specific catalyst and more to the same factors that have been driving the rally this year, namely attractive valuations and liquidity from loose monetary policy around the world.

Investors have also poured money into equities in 2013 as signs of economic recovery take hold. The Dow has gained more than 8 percent so far this year, ahead of the S&P 500 and Nasdaq Composite Index.

The Dow Jones Industrial Average gained 109.06 points, or 0.77 percent, to 14,236.88. The Standard & Poor's 500 Index .SPX rose 12.26 points, or 0.80 percent, to 1,537.46. The Nasdaq Composite Index IXIC climbed 31.01 points, or 0.97 percent, to 3,213.05.

Stocks extended gains after data showed the pace of growth in the vast US services sector accelerated to its fastest pace in a year in February.