NEW YORK (AP) — Investors brushed off early jitters about a potential slowdown in China and pushed the Dow to its highest close of the year.
The Dow Jones industrial average rose 38.16 points, or 0.3 percent, to 14,127.82. The index is a fraction of a percentage point away from its record close of 14,164, reached on Oct. 9, 2007.
Stocks dropped at the opening bell and stayed lower most of the morning amid concern that new steps introduced by the Chinese government to cool the booming housing market in the world's second-largest economy.
Chinese markets were dragged down by housing stocks, which fell sharply after the country's cabinet ordered new measures to rein in home prices. China will raise minimum down payments in areas where prices are deemed to be rising too fast and crack down on efforts to evade limits on how many properties each buyer can acquire.
"The U.S. market continues to digest the negative news and hang tough," said Ryan Detrick, a senior strategist at Schaeffer's Investment Research.
The stock market has rallied this year on optimism that the U.S. housing market is recovering and signs that companies are hiring more. Strong corporate earnings and continuing economic stimulus from the Federal Reserve have also boosted stock prices.
Despite having already logged strong gains this year, stocks may still be able to maintain their momentum as investors move money out of bonds, Rob Lutts, chief investment officer at Cabot Money Management, said.
"It's all about where the money is going," Lutts said. "If the money that is sitting on the sideline, or in bonds, is moving into equities that alone is enough to create that shift."
Investors put $2.8 billion into U.S. stock mutual funds in the week ending Feb. 27, according to Lipper. That's the eighth straight week investors have put more money into stocks, the longest streak of inflows in almost two years.
The Dow has risen 7.8 percent so far this year and the S&P 500 index is 6.9 percent higher, while the yield on the 10-year Treasury note remains below 2 percent. The yield, which moves inversely to its price, rose 3 basis points to 1.87 percent Monday.
For now, stocks are likely to grind higher as investors who missed the rally at the start of the year buy stocks on any drops in the market, Scott Wren, a senior equity strategist at Wells Fargo Advisors, said.
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