On March 29, 1999, the Dow Jones Industrial Average reached 10,000 for the first time. Back then, as a young financial analyst, I remember warning that many of the high-flying technology companies driving the rally offered “vaporware” and generated no earnings. I advised caution; the perma-bulls scoffed.

The booming tech-driven bull market of 1987-2000 was the biggest and longest bull market ever recorded. In an eerie parallel with the current bull market, the giddy rise was propelled by an economic “soft landing” combined with enthusiasm over new technology (in the case of the 1990s, it was the nascent Internet).

As we now know, of course, the dot.com bubble’s implosion began in late 1999 and accelerated in 2000, dragging down the NASDAQ and the rest of the stock market. Companies worth billions when they IPO’d fell to zilch. At the trough of the stock market downturn in 2002, stocks had lost $5 trillion in market capitalization since the peak.

The main stock market indices in recent weeks have been smashing records, with the Dow flirting with another milestone: 40,000 points. Will history repeat itself? Are we on the cusp of another massive tech-driven bull market that will eventually come to ruin?

I’m starting to see traders wearing “Dow 40,000” baseball caps, which makes the contrarian in me nervous. However, despite the parallels with the Nineties, I’m optimistic we’ll avoid a bust (although stretched valuations are making a correction increasingly likely).

Unlike the dodgy dot.com companies of the Clinton era, the tech stalwarts of today are generating hefty profits, boast fortress-like balance sheets, and make products that society profoundly needs. There’s a big difference between artificial intelligence and Pets.com.

The technical and fundamental indicators suggest that there’s plenty of fuel left in this current bull run.

Read This Story: The Technical and Fundamental Indicators: What Are They Telling Us?

Last week, the Federal Open Market Committee (FOMC) opted to maintain the fed funds rate at its current range of 5.25% – 5.5%. The revised “dot plot” indicated the possibility of three rate cuts in 2024. Looking ahead, the FOMC envisions a gradual decline in the fed funds rate, targeting approximately 3.1% by 2026.

Market sentiment leading up to the meeting was uncertain, particularly given the slightly higher-than-expected inflation figures for January and February. Nonetheless, Federal Reserve Chair Jerome Powell’s remarks during last week’s press conference provided reassurance, as he outlined the Fed’s expectation of inflation gradually receding to 2%.

Investors responded positively to the Fed’s dovish stance, with stock markets hitting new highs and Treasury yields softening (see table).

The Fed’s economic growth outlook for 2024 – 2026 has been revised upwards, supporting a soft-landing narrative.

So far this year, we’re witnessing sector rotation, with small-cap, mid-cap, industrials, and financials outperforming due to the improved economic outlook and prospects of lower interest rates.

Meanwhile, in political news that’s a relief to Wall Street, the U.S. Senate overwhelmingly gave final approval Saturday to a $1.2 trillion spending bill to fund more than half of the government, averting a shutdown by sending the legislation to President Biden’s desk.

The main U.S. stock market indices on Monday took a breather from their long run-up and closed mostly lower as follows:

• DJIA: -0.41%
• S&P 500: -0.31%
• NASDAQ: -0.27%
• Russell 2000: +0.10%

The benchmark 10-year U.S Treasury yield (TNX) climbed 0.83% to close at 4.25%.

The week ahead…

The following economic reports, scheduled for release in the coming days, stand out as the most important to watch:

New home sales (Monday); durable goods orders, S&P Case-Shiller home price index, consumer confidence (Tuesday); initial jobless claims, U.S. gross domestic product (second revision), pending home sales, consumer sentiment (Thursday); personal income, personal spending, the personal consumption expenditures price index (PCE), and a Powell speech (Friday).

The most salient data will be the PCE, which is the Fed’s preferred inflation gauge. We’ve been getting hotter-than-expected inflation reports lately, so the PCE reading is likely to prove pivotal for the stock market’s direction.

That said, investors eventually shrugged off hot readings for February of the consumer price and producer price indices; maybe even an elevated PCE won’t derail this rally. Investors seem intent to party as if Bill and Hillary were still in the White House. This time around, we’ll probably avoid the massive hangover.

Editor’s Note: The cryptocurrency market is on a tear as well. When considering crypto investments, it’s essential to research them thoroughly and understand their underlying technology.

Every portfolio should have some sort of exposure to crypto. But you need to be informed, to make the right choices. The good news is, the experts at Investing Daily have done the homework for you.

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John Persinos is the editorial director of Investing Daily.

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