"Many investors are now wondering if this advance is tired and in need of a rest, arguing that a digestion (0 percent to 5 percent decline) would be refreshing, a pullback (5 percent to 10 percent) would be healthy, and a correction (10 percent to 20 percent) would be scary, but would reset the clock quite nicely," said Sam Stovall, chief equity strategist at S&P Capital IQ.
(Read More: Pisani: Can the Rally Continue?)
Google climbed to break above $800 a share for the first time. The search-engine giant's stock has now gained by nearly 35 percent since Larry Page succeeded Eric Schmidt as CEO in April 2011. The search-engine giant crossed the $700 level in October 2007.
Other major companies hit new all-time highs Tuesday, including Johnson & Johnson, Procter & Gamble, Walt Disney and 3M.
Interestingly, while Google soared nearly 20 percent in the last three months, Apple lost almost 19 percent in the same period, creating a near-symmetric divergence between the two tech giants.
Separately, Apple said it was attacked by hackers who infected a small number of Macs, though there was no evidence that any data was taken from the tech giant. Apple said it is releasing an updated software tool to protect customers from Java-related malware Last week, social-networking giant Facebook confirmed that it was targeted by the same hackers last month.
On the economic front, U.S. home builder confidence slipped to 46 in February from 47 in the previous month amid uncertainties about job growth and rising cost for building materials, according to the NAHB/Wells Fargo Housing Market index. Economists surveyed by Reuters had expected a reading of 48. A reading above 50 indicates favorable conditions for builders, a level not seen since April 2006.
Homebuilders including Ryland, Pulte and DR Horton turned lower following the report.
Office Depot soared amid reports that the office supply retailer is in advanced talks to merge with smaller rival OfficeMax and a deal could come as early as this week. And Credit Suisse raised its price target on Office Depot to $6.50 a share from $3.75 a share. Meanwhile, Staples jumped more than 10 percent to lead the S&P 500 gainers.
(Read More: We Know M&A's Back—But Where's It Going Next?)
The deal talks come as M&A have picked up. Just last week, US Airways announced a merger with American Airlines parent AMR. Warren Buffett's Berkshire Hathaway said it was acquiring ketchup maker Heinz and Comcast announced a $16.7 billion deal for the remaining 49 percent of NBCUniversal still owned by General Electric.
So far, more than $158 billion in deals have been announced in 2013, pointing to healthy valuations and positive bets on the economic outlook.