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The Dow gained 103 points reaching 14 222.13, up 94 points and well past the previous intraday high of 14 198.10 set on October 11 2007, as investors continued a rally that has boosted the index by more than 8% so far in 2013.
Hugh Johnson, chief investment officer of Hugh Johnson Advisors, said the spike is good news for consumers in that it tends to lift spirits or raise confidence.
"There is the wealth effect of the fact that when you start to lift confidence it leads to stronger consumer spending. From that point of view it will have positive feedback on the economy."
Enis Taner, global macro editor at research firm Riskreveral.com, said now the focus can be placed on economic policy.
"I'm happy we got it out of the way and now we can focus on more important issues in the market.
"Maybe we can focus on the fundamental news such as earnings and macro economic policy," said Taner.
There is a component of this that is sort of a melt-up and it could also be a boon for investments, said William Larkan, fixed income portfolio manager at Cabot Money Management.
"Everybody is concerned about the low interest rate environment and the Fed pushing a little bit too long and too hard.
"That means that the larger, more global companies are going to be the benefactors, because the stimulus is not only domestic, it is global", said Larkan.
He added that since most of these companies have dividends that exceed what their bond yields are, from a rational standpoint it seems like a better investment in this environment.
Matthew Lifson, a currency trader at Cambridge Mercantile, said the question is, can the Dow maintain these levels?
"The market is interested in risk - that's why the Dow is higher, why the riskier currencies are higher. If you buy stocks, you want to be involved in all of this. And the only thing the sequester is doing right now is hurting air travel. It's not having much of an impact elsewhere."
The Standard & Poor's 500 index rose 12 points, also 0.8%, to 1 538. The S&P is also within striking distance of its own record close of 1 565. The Nasdaq composite gained 32 points, or 1%, to 3 213.62.
Stocks have rallied this year on optimism that the housing market is recovering and companies are slowly starting to hire again. Strong corporate earnings have also helped increase demand.
The market has also benefited from economic stimulus from the Federal Reserve and other global central banks. The US central bank is buying $85bn each month in Treasury bonds and mortgage-backed securities to keep long-term interest rates very low.
