Why are equity markets at their current level?

They are kind of in a yo-yo right now rather.

Like everything everywhere at every time, because that's what people are willing to pay at that point in time.

Rate hikes are not a credible threat, and the market knows this. QE4 should be coming soon.

What is love? What is this longing in our hearts for togetherness? Is not love not unlike the unlikely not it is unlikened to?

we're about 5% down from peak, which is a minor hiccup, not a correction or really anything of substance. I still believe that markets are where they are because of the fed-driven relative value trade. people see little return in bonds (low interest rates) and so the ERP doesn't have to be very high (high PE = low earnings yield = narrower ERP) for people to want to go to stocks and continue to buy them up. also M&A activity, improving employment numbers (very high job openings & quits numbers here in the US), as well as accommodating monetary policy are all reasons why the market is up right now. is it justified? depends on what camp you're in. for our clients, we're still invested in US over international & EM, but we took profits before the recent spat of volatility beginning in September and put it elsewhere, sort of as dry powder if this goes down 10%+.

people don't seem to realize that it's highly unlikely (though not impossible) that when rates rise, they don't rise tremendously. today, the 10y is at 2.3, which is low. we came into the year with it at 2.86, and I'd argue it's been declining because of global demand given lower yields in other countries' sovereign bonds (see Germany & Japan's 10y yields, and make sure you're sitting down), as well as various geopolitical events and China depressing its currency.

in a word, people are uncertain. they always are, they always will be, and they make decisions with their money because of their uncertainty. no one is certain if Europe will break up or if the Euro will survive, no one is certain that employment will keep improving, no one is certain that things will be bad, so they increase exposure to risk assets.

to OP, instead of wondering why the market is doing what it's doing, do your best to buy quality assets at discounts from intrinsic value. regardless of what the market "should" be doing, Mr. Market will not abide.

That's 'cause stocks are cheap. I am a buyer here.

You would do far better trying to understand a basket of 5-10 stocks than you will trying to understand the entire market.