The Dow burst through 20,000 after just a two-month, 1,000-point ride, and strategists say stocks could continue to move up for now, as retail investors are lured in.
"Individual investors have started buying again, really since the election," said Jeff Kleintop, global investment strategist at Charles Schwab. "A psychological number like 20,000 helps to continue that trend, helps to bring in investors that have been sitting in cash, and it really helps to keep the money flow coming in. We see this as a positive year, largely because of the individual investor and not just corporations buying back stock any more." Kleintop added he sees modest gains for the market this year. The Dow crossed 19,000 for the first time on Nov. 22, and big, round numbers are viewed as magnets for investors who feel like they missed out on the rally. The fact that individual investors are jumping in is sometimes viewed as a contrarian indicator, a sign that a top is near, but analysts say that the market rally appears to be strong and should continue even if there are pullbacks.
Kleintop also said the market began its run before the election. "I think this really has been more about cyclical upturn in the U.S. economy irrespective of Trump," said Kleintop, who is chief global investment strategist.
"We could easily see 10 percent or more this year," said Wharton Professor Jeremy Siegel on "Closing Bell." He said President Donald Trump's promise of less regulation and lower taxes is helping fuel the rally.
Scott Redler, partner with T3Live.com, follows the market's short-term technical trends, and he says the positive action around 20,000 has been constructive. He also said the 20,000 level could act as a magnet for individual investors who feel like they've been left out.
"I think there have been a ton of bullish undertones while we just consolidated in six to seven week range, after the big post election move," he said in a note. Redler said the market saw a lot of participation from different sectors. "In a bad market, break outs are sold. Not bought."
For all the bullishness, stock strategists are looking over their shoulder at the bond market. If Trump's policies help fuel more U.S. growth, the worry is that would also fuel inflation and higher rates.
"I'm still bullish. I think we're going higher here. I'm watching rates. I think they're going to have to move a fair amount more. What I'm watching is the correlation between stocks and bonds, and it's still positive," said Jim Paulsen, chief investment strategist at Wells Capital Management.
As stocks surged Wednesday, bond yields also rose. The 10-year yield was at 2.52 percent, up from a low of 2.44 percent earlier in the day. Some strategists have said a 10-year at 3 percent would start to make stocks nervous.
All major market indexes closed at new highs. The Dow jumped 155 to 20,068, its 18th record close since election day. The was also much higher, up 18 points or 0.8 percent at 2,298. The Nasdaq jumped nearly 1 percent to 5,656. Redler said the fact the S&P held 2,280 puts it on track for 2,325 in the first quarter.
"People should be deepening their analysis of what's to come rather than just chase price," said Peter Boockvar, chief market analyst with Lindsey Group.
"The market is still in its honeymoon phase. I don't know. I still think the market is going to end the year more determined by interest rates rather than Trump fiscal policy. I think if the stock market is right in their optimism on U.S. growth, there's no way interest rates aren't going up," he said. Boockvar pointed to comments from the European Central Bank and the Bank of England about winding down bond purchase programs which have been keeping European rates low.
Separately, markets will be watching President Trump's first official meeting with a world leader later this week, when he meets Prime Minister Theresa May. The two are expected to talk trade and the future of U.S.- U.K. relations post-Brexit. May is attending a Republican congressional retreat Thursday.
There is also a deluge of earnings news, including automakers Ford and Fiat Chrysler in the morning, and Alphabet and Intel after the close.
"People were saying, 'Buy the election, sell the inaugural.' That was the buzz word and now it's doing just the opposite. I think there's still a ways to go," said Paulsen. "I think it has legs beyond Trump. There was a pronounced acceleration in the economy."
Thursday's data includes jobless claims at 8:30 a.m. ET. Markit services PMI data is at 9:45 a.m. Leading indicators and new home sales are released at 10 a.m.
Earnings are expected from Caterpillar, Blackstone, Baker Hughes, PulteGroup, Comcast, Diageo, Dow Chemical, Fiat Chrysler, Ford, Biogen, Northrop Grumman, Royal Caribbean, Southwest Air, Raytheon, LVMH and Bristol-Myers Squibb ahead of the bell.