Stocks closed higher but off their best levels after St. Louis Fed president James Bullard and New York Fed president William Dudley dampened speculation the central bank was ready to consider "tapering" its bond-buying.
Attention now turns to Federal Reserve Chairman Ben Bernanke's testimony to the Senate on Wednesday as markets look for any clues as to whether the Fed would signal a willingness to begin withdrawing some stimulus at its June meeting.
The Dow Jones Industrial Average rose for a 19th straight Tuesday, gaining 52.30 points, or 0.34 percent, to finish at a new all-time high of 15387.52 on strength in Merck, Home Depot and JPMorgan. Travelers and Verizon fell.
The S&P 500 rose 2.87 points, or 0.17 percent, to close at a new all-time high of 1669.16, while the Nasdaq added 5.69, or 0.16 percent, to close at 3502.12. The S&P is on track for its biggest one-month point gain since October 2011.
Among S&P sectors, health care and consumer discretionary rose, and telecoms are lagging.
With no economic data of note Tuesday, investors focused on speeches from Fed officials for early indication as to whether Bernanke's testimony will signify a reduction or end to monetary easing.
In a lecture in Germany, Bullard noted the U.S. should "Continue with the present quantitative easing program, adjusting the rate of purchases appropriately in view of incoming data on both real economic performance and inflation."
"He's traditionally rather hawkish," said one trader of Bullard. "He came out with some dovish comments espousing QE's asset purchase efficacy."
(Read More: What the Fed Misses: The Market Isn't the Economy)
Stocks got an added boost after Dudley said that the central bank should be prepared to change the pace of its bond-buying program as conditions warrant.
"I believe we should be prepared to adjust the total amount of purchases to that needed to deliver a substantial improvement in the labor market outlook in the context of price stability," Dudley said, adding, "In doing this, we might adjust the pace of purchases up or down as the labor market and inflation outlook changes in a material way."
But because of the uncertain economic outlook, "I cannot be sure which way—up or down—the next change will be," he added.
Market speculation about the tapering off of quantitative easing has grown over the past week, fueled by speeches from Fed hawks John Williams, Charles Plosser, and Chicago Fed President Charles Evans.
"We've had this huge dependence on QE over the course of the last three or four years," Stephen King, chief global economist at HSBC, told CNBC. "There's no doubt that financial assets have risen dramatically in value as a consequence of QE. I would argue financial markets become increasingly dependent on QE almost as a painkilling drug."
And that could lead to a pullback in stocks since fundamentals haven't kept up with the market rally, says UBS equity strategist Jonathan Golub. "It's all about the Fed and the pumping of liquidity," Golub told CNBC, "and when the market gets spooked on that" it's going to move lower. Golub has a 1,425 year-end target on the S&P 500, among the lowest on Wall Street.
Goldman Sachs strategists, meanwhile, raised their 2013 S&P 500 target to 1750, implying another 5 percent gain from current levels. The strategists base this increase not on earnings growth but multiple expansion.
"Reasons for P/E expansion include confidence in the medium-term outlook for U.S. economic growth and the wide gap between equity and persistently low bond yields that we assume will be closed more by stocks than bonds," the strategists wrote in a note.
JPMorgan, Apple CEOs in Spotlight
Turning to corporate news, JPMorgan defeated a proposal to strip CEO Jamie Dimon of his chairman role with 32.2 percent voting in support of the proposal. The stock rose nearly 2 percent.
Apple CEO Tim Cook, meanwhile, provided testimony before a Senate panel on the company's tax practices and called for changes to the tax code. Apple is facing allegations it is using tax havens to avoid paying taxes.
(Read More: Apple Used Irish Unit to Avoid Billions in Taxes)
Sony surged 9 percent on a report in the Nikkei that the company is considering a proposal from hedge fund Third Point to spin off its movie and music business.
Home Depot reported better-than-expected results and boosted its full-year outlook. A number of analysts raised price targets on the news.
(Read More: Home Depot Reaps Housing Recovery's Effects)
Best Buy, meanwhile, reported better-than-expected results, but warned that heavy investments would likely pressure earnings.
In other earnings, medical device maker Medtronic shares surged on strong sales growth in its endovascular and structural heart units.
Carnival, meanwhile, cut its earnings outlook, with the cruise line operator now seeing full-year profit of $1.45 to $1.65 per share, compared to current Street estimates of $1.98.
The U.K.'s Vodafone posted its largest ever quarterly fall in key organic service revenue, and held onto the dividend from its U.S. arm rather than returning it to shareholders. The telecoms giant also made no mention of whether it will sell its 45 percent stake in Verizon Wireless to U.S. partner Verizon Communications.
(Read More: Vodafone Silent on Verizon, Posts Fall in Revenue)
As of Monday's close, 93 percent of S&P 500 companies have reported quarterly results, with 67 percent of firms topping earnings expectations and 24 percent missing forecasts, according to data from Reuters. If all remaining companies report earnings in line with estimates, earnings will be up 4.8 percent from last year's first quarter.