We're there! This morning, investors pushed the Dow Jones Industrials Average (DJINDICES:^DJI) above its all-time closing high as well as its intraday record. As of 12 p.m. EST, the index is up 150 points, or 1%, to 14,278. Meanwhile, the broader S&P 500 (SNPINDEX:^GSPC) is up 1% to 1,542. Fittingly, the VIX (VOLATILITYINDICES:^VIX) index, Wall Street's fear gauge, is down 5%.

Breaking it down
The biggest percentage gainers in the Dow this morning belonged to "old tech" (
Cisco Systems and Hewlett-Packard), financials (American Express, Bank of America, and JPMorgan) and conglomerates (United Technologies and General Electric). However, the Dow is price-weighted, so the single biggest contributor to the index's advance today is IBM, which is up about 1%.

The last time we were at these levels was during the heroic last gasp of a mortally wounded bull market. The U.S. financial system was teetering on the edge of a precipice that would ultimately engulf the global economy. It's clear, with the benefit hindsight, that underlying fundamentals are sounder today than they were then, but it's worth characterizing that observation.

The following graph, for example, displays the performance of the Dow Jones Industrial Average (blue line) between Oct. 9, 2007  and yesterday; U.S. gross domestic product (orange line), a measure of economic activity; and the Shiller P/E of the S&P 500 (red line), a long-term indicator of stock valuations:

^DJI Chart

^DJI data by YCharts.

In sum, while stock prices are flat (ex-dividends) over this period, economic activity has increased, albeit slowly, and the broad market's valuation has come down nearly 16%. That's a much healthier context for further stock-price gains, but risk is still present. The aforementioned Shiller P/E, which is calculated based on average trailing-10-year real earnings per share remains substantially above its long-term historical average. Investors need to stay alert.