The Dow Jones industrial average closed at a record high Tuesday.

It jumped up from the opening bell, climbed as much as 158 points early and reached 14,286, breaking through its previous record high set in October 2007.

The index fell back slightly and closed up 125.95 points at 14,253.77.

In Toronto, the S&P/TSX rose 28.63 points at 12,736.04, still well below its all-time high of 15,073 reached in June 2008.

The Standard & Poor's 500 index rose 14.59 points to 1,539.79, within striking distance of its own record close of 1,565. The Nasdaq composite gained 42.10 points to 3,224.13.

The gains in the Dow represent a remarkable comeback for the stock market. The Dow has more than doubled since falling to a low of 6,547 in March 2009 following the financial crisis and the Great Recession.

"It signals that things are getting back to normal," says Nicolas Colas, chief market strategist at BNY ConvergEx, a brokerage. "Unemployment is too high, economic growth too sluggish, but stocks are anticipating improvement."

Stocks have rebounded sharply since then with the help of a large dose of stimulus from the Federal Reserve, even as the economic recovery has been slow and steady rather than spectacular.

Economy doesn't fare as well

"Whether they want to admit it or not, everyone is very impressed with the resilience of the market," said Alec Young, a global equity strategist at S&P Capital IQ.

The last time the Dow was this high, Apple had just sold its first iPhone and George W. Bush had another year as president.

The U.S. housing market had yet to implode, and the financial crisis that brought down Lehman Brothers was still a year away.

The recovery in stocks may even have been quicker, had memories of the financial system's near collapse not been on investors minds, says Robert Pavlik, chief market strategist at Banyan Partners.

"It's still pretty close to the front of people's brains," says Pavlik.

"That's one of the reasons that people are hesitant to invest in the stock market."

The Dow record does not include the impact of inflation. Adjusted for that, the Dow would have to reach 15,502 to match its old record.

Despite the gains in the stock market since then, the U.S. economy has not fared nearly as well. Unemployment was just 4.7 per cent when the Dow last reached a record five and half years ago, versus 7.9 per cent today.

But the economy is strengthening in many areas. Housing is recovering, companies are hiring more and Corporate America's earnings are strong. That's fueled a nine per cent rise in stocks this year, impressing even the most ardent skeptics.

For all of last year, the index rose seven per cent.

Stocks are also benefiting from the economic stimulus from the Federal Reserve and other global central banks. The U.S. central bank is buying $85 billion US each month in Treasury bonds and mortgage-backed securities to keep long-term interest rates very low.

Dow records are dismissed by some investors as unimportant because the index comprises just 30 stocks.

Many professional investors prefer to follow the S&P 500, which, as the name implies, tracks 500 companies. But the Dow has closely followed the ups and downs of its broader rival over the years, and is a good proxy for how big companies are doing.

The S&P 500 is up 128 per cent from its March 9, 2009 low, about the same as the Dow.

With files from CBC News