For the year, the Russell 2000 has soared nearly 20 percent, outpacing the S&P 500's 16-percent rally. Small-cap leadership is usually considered a bullish sign for the overall market, according to market professionals, as the sector is considered a good gauge to judge economic health on a domestic level.
"This move above 1,000 is certainly encouraging, but the thing that's most intriguing is how the stock market has come to grips with a higher interest rate environment," said Todd Salamone, the director of research at Schaeffer's Investment Research. "Investors are looking at it as something the economy can handle and that it's a bullish sign for the economy."
The yield on the 10-year note has gained a full percentage point since hitting its bottom of 1.62 percent in early May. And within that period, the Russell 2000 spiked nearly 8.3 percent, widely outperforming the S&P 500's gain of 3.4 percent. Analysts say the small-cap index's outperformance can be attributed to investors favoring companies that mainly do business in the U.S., over those that conduct business overseas.
(Read More: Gabelli's 3 Bright Investment Areas)
"It's also a sign that there's more people are more willing to take risk," said Salamone. "And right now, another reason you're seeing this massive small-cap outperformance is because with bond yields moving higher, [small caps] have become more competitive versus stocks that pay dividends. So you're seeing a rotation out of high-dividend stocks as investors seek higher returns via capital gains and higher beta type names such as the small cap."
As a result, strategists believe other major averages have further upside ahead.
"I do suspect you'll see the other major averages follow suit and also make new all-time highs…there's still more room to run this year," according to Johnson. "We reiterate our price objectives for the S&P 500 established in August of 2012 as follows: a 12-month price objective of 1,700 and a 24-month price objective of 2,000."
Meanwhile, Salamone pointed out that "round numbers" could be a challenging area for indexes. For example, he noted the last time the S&P 400 midcap index similarly hit its benchmark 1,000 mark for the first time in April 2011; it took nearly two years for the index to make a sustainable move above the level.
"Still, from a sentiment perspective, we're in a much better backdrop now."
(Read More: IMF Flags Top Three Threats to Global Growth)