Here's what has driven the Dow rally to 40,000, and why it could keep going

Passing major milestones such as the 40,000 barrier the Dow Jones Industrial Average eclipsed this week makes for a nice headline, but market experts do not take much else from the move.

What really matters is what underpins the market, namely, whether companies are seeing sustainable profits, where monetary and fiscal policy is positioned and what the future landscape is for economic health and specifically the labor market.

Fortunately for the market, most of those variables look pretty positive these days, and are largely behind the blue-chip average's latest landmark move.

Forty thousand "is a great milestone, but [at the] end of the day there isn't much difference between 39,999 and 40k," said Ryan Detrick, chief market strategist at Carson Group. "Still, this is a great reminder of how far we've come. Think about how many people were talking about recessions and bear markets all of last year. Now we are once again back to new highs."

Indeed, the market stumbled through 2022, then entered 2023 with nearly all of Wall Street convinced that a looming recession would further pressure stocks.

But the "Waiting for Godot" economic retrenchment never happened, despite wobbly corporate profits and other headwinds. At the same time, fiscal help from Congress helped offset higher interest rates, while a boom in the technology sector courtesy of artificial intelligence provided wind beneath the market's wings.

Those factors outweighed queasiness over where the Federal Reserve was headed with monetary policy amid inflation that has proved surprisingly sticky.

"Investors just got tired of being scared about all these pessimistic thoughts that were flying around during 2022 and 2023," said market veteran Ed Yardeni, head of Yardeni