The rally was mostly fueled by a sense of relief.

There are now three possible COVID-19 vaccines making their way to regulatory approval and that's fueling hopes the worse of the pandemic will soon be in the rear-view mirror.

With that in mind, Wall Street is betting on a stronger economic recovery next year.

Investors are also relieved that the fraught political stand-off in the U.S. appears to be reaching a conclusion. President-elect Joe Biden was given the formal go-ahead on Monday for his transition to the White House, ending weeks of political uncertainty.

Sources say he's lined up former Federal Reserve Chairman Janet Yellen, a market favorite, to run the Treasury, if confirmed.

Markets are betting that with Yellen at the Treasury and Jerome Powell at the Fed - more stimulus will be coming next year.

And for many, that stimulus can't come fast enough. There are still millions of Americans who are out of work and extra jobless assistance is due to run out at the end of the year. A new round of business disruptions could force some to close their doors for good and send more to the unemployment line.

But investors are betting the pain will be short-lived thanks to the vaccines.

And it's not just the Dow hitting a record high on all the optimism. A global stock market index is trading at a record high as well - as investors around the world bet the global economy is likely to be stronger in 2021 once the virus is under control.