Stocks kicked off December with a rally Tuesday as Dubai fears subsided and the dollar retreated, pushing gold to a new record above $1,200 an ounce.
The Dow Jones Industrial Average gained 126.74, or 1.2 percent, to close at 10,471.58, its highest level since since October 2008. The S&P 500 added 1.2 percent and the Nasdaq advanced 1.5 percent.
The CBOE volatility index, widely considered the best gauge of fear in the market, dropped more than 10 percent to 21.91.
On the M&A front, General Electric and Comcast have apparently reached a deal for joint ownership of NBC Universal, the parent of CNBC.
Auto makers reported their November results today.
Ford said its sales rose 8.6 percent, better than expected.
General Motors sales rose 6.3 percent, just shy of the 7 percent expected, but Chrysler's sales tumbled 25 percent from an already weak level last year.
GM dropped a bombshell after the closing bell, saying CEO Fritz Henderson will step down. Chairman Ed Whitacre will assume the role on an interim basis until a permanent successor is found.
Pfizer was the biggest gainer on the Dow, up 3.7 percent, after the drug maker said it has acquired the rights to a treatment for a Gaucher disease, a rare genetic disorder that triggers the accumulation of a fatty substance in cells and some organs. Rare-disease treatments have become increasingly attractive to drug makers as treatments are often expensive and the revenue generated can be substantial.
Most Dow components advanced, except for JPMorgan and American Express — two of the best performers in Monday's session — and Kraft .
Financials were the weakest performer of 10 key S&P sectors after analyst Dick Bove said he's concerned that the government wants to increase capital requirements for banks. Of the top 30, Bove said, only 4 don't need to raise capital: Citigroup, State Street, Northern Trust and First Horizon.
AIG shares rallied 8.6 percent after the insurance giant reduced its debt to the government by $25 billion, giving the government stakes in two of its units totaling that amount ahead of their planned spinoff.