Stocks returning to highs not seen since last fall

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When Wall Street nearly collapsed

Would panic prevail? That was the question gripping the world in the days surrounding the fall of Lehman Brothers on Sept. 15, 2008. One year after that terrifying Monday, the people who struggled to cope with the financial crisis share what they were thinking as chaos broke out.

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NEW YORK (CNNMoney.com) -- Stocks rallied Tuesday, finding momentum after a choppy morning, with the Dow, S&P 500 and Nasdaq all hitting one-year highs.

The Dow Jones industrial average (INDU) rose 0.5% to end at 9,829.87 -- its highest point since Oct. 6, 2008.

The S&P 500 (SPX) index added 0.7%, ending at 1,071.66 -- its highest point since Oct. 3, 2008.

The Nasdaq composite (COMP) gained 0.4% to end at 2,146.30 -- its highest point since Sept. 26, 2008.

Stocks have carved out one-year highs repeatedly over the past two weeks, with the Nasdaq ending Monday's session at its highest level since shortly after the collapse of Lehman Brothers a year ago.

The slow, steady move up is creating anxiety in investors that they are missing out, which in turn is drawing more money into the market, said Larry Glazer, managing director at Mayflower Advisors.

"As the equity market keeps going up, its giving investors a reason to put their money to work," he said. "The bulk of (mutual) fund flows have been fixed income driven, but they are now starting to move incrementally into equities."

In the short term, investors are also attuned to the Federal Reserve meeting that concludes Wednesday and the Dow's climb toward 10,000. Although 10,000 is not a key technical level, it is a significant psychological level.

Despite ongoing calls for a September slide, investors continue to use any declines as an opportunity to get back in.

"The sign on a money manager's door is not 'Larry the cash hoarder,' it's 'Larry the money manager,'" said Jamie Cox, managing partner at Harris Financial Group. "And if he's sitting on a lot of cash, he's behind."

Dollar impact: Stocks have also benefited from the weakness of the dollar versus other major currencies.

Dollar-traded commodities and corresponding commodity stocks tend to rise when the greenback weakens. In addition, the weaker dollar impacts the stocks of companies that have a strong presence overseas.

Harris said that over the last six months it's been the most volatile names, leading the charge. He said that the leadership is now shifting to so-called higher quality names, as evidenced by the recent spikes in companies such as GE (GE, Fortune 500), AT&T (T, Fortune 500) and Verizon Communications (VZ, Fortune 500).

Since bottoming at a 12-year low March 9, the S&P 500 has gained 57.4% and the Dow has gained 49%, as of Monday's close. After hitting a six-year low, the Nasdaq has gained 68.5%.

Stocks have risen during those 6-1/2 months on signs that the economy is starting to recover -- and due to extraordinary amounts of fiscal and monetary stimulus.

On the move: Dow gainers were fairly broad based, with 20 of 30 issues rising, including Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500), Alcoa (AA, Fortune 500), Hewlett-Packard (HPQ, Fortune 500) and United Technologies (UTX, Fortune 500).

A number of financial stocks gained too, including Dow components Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).

Among other gainers, Citigroup (C, Fortune 500) rose 5% after Singapore sovereign wealth fund GIC said it sold half of its stake in the company. GIC had bought a 9% stake in Citigroup at its lows and opted to cash in on the recent market rally to earn $1.6 billion.

The KBW Bank (BKX) sector index gained 2.3%.

Market breadth was positive. On the New York Stock Exchange, winners beat losers seven to three on volume of 1.26 billion shares. On the Nasdaq, advancers topped decliners five to four on volume of 2.51 billion shares.

Fed: The Federal Reserve concludes its two-day policy meeting Wednesday, with an announcement expected at around 2:15 p.m. ET. The central bank is expected to hold short-term interest rates unchanged at levels near zero.

Investors will also look to the central bank's statement for clarity on how they see the economic outlook. Fed chief Ben Bernanke said last week that the recession is likely over, but the labor market still has a long way to go.

Investors will also be looking to see if they say anything about how they plan to wind down programs that pumped trillions into the economy to cushion the blow of the recession.

Also Wednesday, Treasury Secretary Timothy Geithner is set to testify before the House Financial Services committee on regulatory reform, starting at around 9:30 a.m. ET.

Economy: July home prices rose 0.3%, according to a report from the Federal Housing Finance Agency (FHFA) released shortly after the start of trading. That was short of forecasts for a rise of 0.5%, according to Briefing.com survey of economists. Home prices rose a revised 0.1% in June.

World markets: Global markets rallied. In Europe, London's FTSE 100, France's CAC 40 and Germany's DAX all advanced. Asian markets ended higher.

Commodities: The weaker dollar helped boost oil and gold prices.

U.S. light crude oil for October delivery rose $1.84 to settle at $71.55 a barrel on the New York Mercantile Exchange. COMEX gold for December delivery rose $10.60 to settle at $1,015.50 an ounce. Gold closed at a record high of $1,020.20 last week.

Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.46% from 3.48% late Monday. Treasury prices and yields move in opposite directions.