WASHINGTON (WUSA9) -- What is going on on Wall Street? We have these over-aching fears: sequestration and how the impact of government spending cuts could shave the nation's economy growth rate.
Europe's debt problems are still lurking, unemployment is still high and yet, we have had an incredible run for stocks recently.
Case in point, the Dow matching its all-time high close this week with a new record again Thursday. The S&P 500 has jumped 128 percent from its lows back in March 2009.
Small investors have only just started to participate in this rally. Seems like a good time, right? So, what has changed lately to turn bears into bulls?
Market analysts are pointing to a couple of factors. One major change: optimism.
Yes, the job market is still too soft and so is economic growth but there is a sea change going on that things feel like they are getting better. Indicators feeding this fire include better manufacturing data, and some signs that hiring is picking. We may see more of that Friday morning with the February jobs report.
Consumers are also starting to spend again. Car sales are at a five-year high. Home prices are starting to rise. Banks are making it easier to get loans to buy those big-ticket items and corporate profits haven't look half bad recently.
Still, there are some reasons to pause. The Dow record is great with a caveat. It does not factor in the impact of inflation. If it did, the Dow would have to gain more than 1,000 points to hit an all-time high and the middle class is still in the hole. Most of the assets of middle-class Americans are still tied up in the value of their homes and they are still a third below their peak.