"What we're starting to see is dissipating macro risk and a lessening of this risk-on, risk-off environment and now we're starting to capture the hearts and minds of the individual investor," Charles Schwab's Liz Ann Sonders told CNBC. "I would actually like to see a little bit of a pullback in the near term, but bears are being forced into a corner."
Caterpillar shares jumped nearly 2 percent after it reported earnings of $1.91 a share, excluding a write-down of 87 cents a share relating to a China holding. That compared to earnings of $2.32 a share in the year-earlier period.
The company said it expects profits to improve during the year.
CEO Douglas Oberhelman told CNBC, "What's coming ups in 2013? ... It could be a pretty good year, but we've got that same political issue here in this country that will drive a lot of uncertainty if they start screaming at each other again. [So] we chose a wide-range top and bottom [lines]" for guidance.
Apple shares rebounded nearly 3 percent as bargain hunters stepped in to buy the former highflier. Apple shares are down nearly 16 percent so far this year. The tech giant also announced that it is updating its iOS to 6.1, saying the new version adds LTE support for 36 additional iPhone carriers worldwide.
Meanwhile, shares of Research In Motion fell nearly 7 percent ahead of its BlackBerry 10 launch. RBC Capital writes, "A lot of information on RIM's new BB10 devices has already been leaked so we expect the stock to settle back down post Wednesday's launch."