Stocks kicked off the second quarter with solid gains with the S&P 500 setting a fresh intraday record following a batch of economic reports.
Major averages logged a three-day win streak for the first time since February.
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Major U.S. Indexes
The Dow Jones Industrial Average rose 74.95 points to finish at 16,532.61, lifted by Cisco and Boeing.
The gained 13.18 points to close at 1,885.52. And the Nasdaq rallied 69.05 points to end at 4,268.04.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid near 13.
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Stocks wrapped up a mixed first quarter, with the Dow ending in the red and the S&P and Nasdaq squeezing out moderate gains.
And with the start of a new month, investors are hoping that April will be brighter for stocks. According to market patterns, April is the best-performing month for the Dow, with the index posting an average gain of over 2 percent over the last 50 years.
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U.S. manufacturing growth improved for the second month in March. The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.7 in March, which was up slightly from February's read of 53.2 but below the expected 54.0 reading in a Reuters poll.
"This is not much of a rebound but the components were mixed," said Peter Boockvar, managing director at The Lindsey Group. "Bottom line, some normality in the economy was reflected in the data but the headline figure is still 1 point below its six-month average. I'm not sure if the further push higher in the S&P is because they liked the internals of the data or are more focused on the mediocre headline figure and weak employment component that could keep the Fed ever more dovish."
Construction spending edged up just 0.1 percent to an annual rate of $945.7 billion in February, according to the Commerce Department. Economists polled by Reuters had forecast construction outlays to be flat.
Bond prices slipped near session lows following the economic reports.
Elsewhere, factory activity growth slowed slightly in March after nearing a four-year high in February, according to financial data firm Markit, with the final U.S. Manufacturing Purchasing Managers Index slipped to from 57.1 in February to 55.5. Readings above 50 indicate expansion.
General Motors CEO Mary Barra testified before the House Energy and Commerce Committee as U.S. lawmakers challenged Barra over the automaker's slow response to defective ignition switches in its cars. Since February, GM has recalled 2.6 million vehicles due to concerns about ignition switches that unexpectedly turn off engines during operation and leave airbags, power steering and power brakes inoperable.
Separately, GM said its auto sales rose 4.1 percent in March, above estimates for 0.5 percent.
Ford advanced after the automaker said March auto sales rose 3.4 percent, exceeding expectations. Japanese rival Toyota said sales rose 5 percent, also topping estimates.
Intuitive Surgical surged to lead the S&P 500 gainers after the FDA granted marketing clearance for the company's da Vinci Xi Surgical System, a surgical platform designed to enable complex surgery using a minimally invasive approach.
Investors will remain focused on the monthly government jobs report, due Friday. Economists polled by Reuters expect a gain of 197,000 new jobs in March. The U.S. created 175,000 jobs in February, exceeding expectations.
Fed Chair Janet Yellen gave stocks a boost on Monday when she said the central bank would stay accommodative for some time. Her dovish comments countered an earlier statement to the effect that the Fed could raise interest rates within six months of ending its asset-buying program.
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"The market has pushed up the timing of the first rate hike from August to May of 2015, and the Fed is clearly pushing back against that," said John Briggs, head of cross-asset strategy at RBS. "If you get strong data, that divergence could widen, and if it's weak data, the market is more likely to listen to the Fed's dovish overtone."
Meanwhile, emerging markets extended their rally, with the iShares MSCI Emerging Markets ETF higher for the ninth-consecutive session, up more than 7 percent.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)
Coming Up This Week:
WEDNESDAY: Mortgage applications, ADP employment report, factory orders, oil inventories, Fed's Lockhart speaks, Fed's Bullard speaks, Amazon event, Nokia event; Earnings from Monsanto
THURSDAY: Challenger job-cut report, international trade, jobless claims, PMI services index, ISM non-mfg index, natural gas inventories, Fed balance sheet/money supply, Google Class C shares expected; Earnings from Global Payments, Micron
FRIDAY: Nonfarm payrolls, GM 'Emergency Motion' hearing; Earnings from CarMax