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Stocks rise; S&P 500 scores first finish above 2,000

U.S. stocks rose on Tuesday, lifting the Dow to an all-time high and the S&P 500 to its first finish above 2,000, after better-than-expected reports -- including a jump in orders for durable goods -- cast favorable light on the U.S. economy.

The close above 2,000 gives Wall Street a "psychological lift," said Hinds.Cameron Hinds, regional chief investment officer for Wells Fargo Private Bank in Lincoln, Neb.

"We've had a heck of a run, it's been over three years since we've had a 10 percent correction, and the latest bout with weakness didn't even get to a five percent correction," Hinds added.

"There's an expectation that times are good and are going to get better, and that this economy has legs," said Brad McMillan, chief investment officer at Commonwealth Financial.

That said, "there is a lot of caution there; we just broke a big barrier. We failed to break over 2,000 a couple of times. If we don't rise above it in a convincing way, that's the market telling us" that investors are wary, said McMillan, who added that the outcome should become clearer in the next week or so as Wall Street professionals return from summer breaks.

Burger King Worldwide fell after saying it would acquire Tim Hortons in an $11 billion deal. Best Buy fell after reporting a larger-than-expected drop in sales.

"A few of the economic indicators have been pretty solid, which flows through to corporate profit," said Hinds at Wells Fargo.

"Today's report, while not perfect, reinforces market optimism regarding the economy," emailed Dan Greenhaus, chief strategist at BTIG, of the data, which had orders for durable goods rising 22.6 percent last month versus a 7.5 percent estimate. The bookings for longer-lasting goods came on increased demand for commercial aircraft.

"As the third quarter gets underway, we stick to our expectation for three percent growth and with it, higher equity prices," Greenhaus noted.

A measure of consumer confidence hit 92.4 in August, exceeding estimates of 89.

Another report had home prices rising at a slower rate in the year ending in June, with the S&P/Case-Shiller index of property values increasing 8.1 percent from June 2013.

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Price
 
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DJIA
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S&P 500
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NASDAQ
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The CBOE Volatility Index, a measure of investor uncertainty, fell 0.6 percent to 11.63.

After climbing to an intraday record of 17,153.80, the Dow Jones Industrial Average added 29.83 points, or 0.2 percent, to 17,106.70, below its July 16 closing high, with UnitedHealth Group pacing blue-chip gains that included 17 of 30 components.

Rising to an intraday record of 2005.04, the S&P 500 lately advanced 2.10 points, or 0.1 percent, to 2,000.02, with energy pacing sector gains among its 10 major industry groups.

After a brief dip into negative terrain, the Nasdaq gained 13.29 points, or 0.3 percent, to 4,570.64, its highest since March 2000.

For every share falling, two gained on the New York Stock Exchange, where 512 million shares traded. Composite volume topped 2.4 billion.

Trader on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Trader on the floor of the New York Stock Exchange.

The U.S. dollar gained against other global currencies, and the benchmark 10-year Treasury yield used in figuring mortgage rates and other consumer loans rose a basis point to 2.395 percent.

"If you were just to look at economic fundamentals, the 10-year yield should be higher," said Wells Fargo's Hinds.

But in the short-term the scenario is unlikely to change, given "rates in Europe and Japan are so darn low, so even though we think our rates are low we have money flowing into the U.S. because we have higher rates and a stronger economy," he said.

"We still believe rates will move higher as we go into next year," Hinds added.

Dollar-denominated commodities gained, with gold futures for December up $6.30, or 0.5 percent, at $1,285.20 an ounce and crude-oil futures for October rising 51 cents, or 0.5 percent, at $93.86 a barrel.

The S&P 500 crossed 2,000 for the first time on Monday, lifted by a round of corporate deals and optimism that the European Central Bank would embark on further moves to stimulate the European economy.

Read MoreAfter crossing 2,000, record-high close for S&P 500

—By CNBC's Kate Gibson

Coming Up This Week:

Wednesday

Earnings: Brown Forman, Chico's, Tiffany, Williams-Sonoma

1:00 p.m.: $35 billion 5-year auction

Thursday

Earnings: Dollar General, Splunk, Abercrombie and Fitch, Toronto Dominion, Pall Corp, Signet, Canadian Imperial Bank

8:30 a.m.: Initial claims

8:30 a.m.: Q2 GDP (second reading)

10:00 a.m.: Pending home sales

11:00 a.m.: Kansas City Fed survey

1:00 p.m.: $29 7-year note auction

Friday

8:30 a.m.: Personal income/spending

9:45 a.m.: Chicago PMI

9:55 a.m.: Consumer sentiment

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