US stock market rally has slowed, but it’s not over

The Dow Jones Industrial Average (DJIA) has rallied more than 2% after a strong start to the week, but the S&P 500 (SPX) has regained more ground, with the index reaching its highest level in more than a month.

The rally is being driven by a number of factors, including the continued sell-off in the tech sector, and the recent approval by Congress of the so-called sequester cuts in government spending, according to S&amps top strategist Michael Heilbroner.

“The market is still up, it’s just not at the level we want,” Heilcaoer told CNBC.

For more:Read more on the Dow:Investor sentiment has been in the red as the market continues to struggle with the fallout from the sequester, which was approved by Congress on Thursday.

Investors are also wary of the prospects for a possible downgrade by the International Monetary Fund (IMF), which could weigh on the value of the dollar.

Heilbuner said investors are looking for a turnaround as the global economy starts to recover.

We believe that the S+P 500 has a great future, but we’re seeing a lot of volatility in the market,” he said.

More broadly, the stock market is starting to bounce back from its worst slump in almost three years.

After dipping to a 12-month low on Friday, the Dow Jones industrial average (DJI) rose 0.3% to 25,931.83.

It had dropped to a 14-month high of 25,721.82 on Wednesday.

A stronger dollar has weighed on investors, with Chinese shares rising nearly 7% on Friday after the country lifted its foreign exchange restrictions.

US stocks also rose sharply, with Dow futures up nearly 2% to close at 25,800.20, while the Nasdaq composite gained 3.3%.

Read moreOn Friday, U.S. crude oil fell to a four-month lows, dropping below $40 a barrel for the first time in over a year.

Brent crude, meanwhile, traded at $40.52 a barrel on Thursday, its lowest level in nearly a month as investors fear a global slowdown and the impact of the sequesters spending cuts.

Read moreThe Federal Reserve has yet to announce a decision on the future of its $85 billion bond buying program, which the central bank plans to start at the end of March.

Its next policy meeting is set for Feb. 12.

On Thursday, Treasury Secretary Steven Mnuchin said the U.N. climate agreement is not dead.

Read moreIn its most recent report, the International Energy Agency said the world has warmed 2.1C since 1990.

Read MoreOn Friday the IMF said the pace of global economic growth in the next three years is likely to be lower than expected due to the impact from the sequestration cuts and rising energy costs.

That means the global economic recovery could slow further in coming years.Read Less