U.S. equities rose on Tuesday, as a post-election rally continued, while investors digested key economic data and braced for two key central bank meetings.
The Dow Jones industrial average rose about 35 points to post a record closing high, with Goldman Sachs adding the most gains. The blue-chips index also posted its 11th record close since the election. Earlier, Boeing shares were under pressure after President-elect Donald Trump threatened to cancel an order for a new 747 Air Force One.
"I think we can still go higher towards the end of the year," said Aaron Clark, portfolio manager at GW&K Investment Management. "The post-election narrative is still in place."
The S&P 500 gained 0.3 percent, with telecommunications rallying 1.5 percent to lead advancers. Energy shares, meanwhile, faced pressure from falling oil prices. U.S. crude futures for January delivery dropped 1.7 percent to settle at $50.93 per barrel.
The Nasdaq composite advanced approximately half of a percent, while the small caps Russell 2000 and the S&P Mid Cap 400 closed at record highs.
"Short-term momentum remains positive for the SPX despite last week's pullback," said Katie Stockton, chief technical strategist, in an email. "Sentiment has gotten overly bullish by some measures, but we think it can stay that way through the holidays given positive seasonal influences."
Stocks have rallied sharply since Donald Trump stunned the world by defeating former Secretary of State Hillary Clinton in the U.S. presidential election, with optimism for greater infrastructure spending and deregulation of certain sectors propelling the sharp increase. The Russell 2000 has handily outperformed the three major indexes since Nov. 8.
US stocks since Nov. 8
In economic news, third-quarter U.S. productivity rose at an annualized rate of 3.1 percent, the Labor Department said, while the U.S. trade deficit widened to $42.6 billion. October factory orders, rose 2.7 percent, slightly above a 2.6 percent estimate from Reuters.
The data was released as investors got ready for the Federal Reserve's meeting next week and a European Central Bank announcement on monetary policy due Thursday.
The Fed is largely expected to raise interest rates by 25 basis points, as investors look for clues about the central bank's pace of normalization. According to the CME Group's FedWatch tool, market expectations for a rate hike next week are more than 90 percent, but just 5.2 percent for a February increase. Meanwhile, the ECB is widely expected to extend its quantitative easing beyond March 2017.
"The transparency and certainty of monetary policy will eliminate any lingering skittishness and source a stiff tailwind at the back of the broader indices. Short term participants therefore have a green light to hitch a ride on Santa's sleigh as shares climb ahead of the ball falling in Times Square," Jeremy Klein, chief market strategist at FBN Securities, said in a note.
"Monetary policy has taken a back seat to fiscal policy, which I think is a good thing," said GW&K's Clark. He added, however, investors could be thrown for a loop if the Fed indicates a faster pace of normalization.
Investors have been undeterred by a number of events since the election, including the sharp rise in sovereign bond yields around the world and a key referendum in Italy on Sunday which led to Prime Minister Matteo Renzi's resignation.
"There's a certain amount of optimism that has entered the market and people seem to be ignoring the news," said Bruce Bittles, chief investment strategist at Baird. "The Italian referendum didn't change much; it wasn't so much a vote on the EU, but rather the prime minister."
That said, the plebiscite's failure leaves the much maligned Italian banks in a precarious position. The Financial Times reported that Italy's Banca Monte dei Paschi di Siena has been told to prepare for a state bailout on reports that a key investor is reconsidering whether to contribute to a 5 billion euro recapitalization.
U.S. Treasurys traded mixed, with the benchmark 10-year note slipping to 2.3915 percent, while the two-year note yield rose to 1.116 percent. The dollar advanced 0.42 percent against a basket of currencies, with the euro near $1.072 and the around 114.
Overseas, European equities traded mostly higher, with the pan-European Stoxx 600 index rising 0.97 percent, as political instability worries faded. In Asia, stocks rose after the Reserve Bank of Australia kept interest rates unchanged, with the Nikkei 225 rising 0.47 percent.
Major U.S. Indexes
The Dow Jones industrial average closed 35.54 points higher, or 0.18 percent, at 19,251.78, with Goldman Sachs leading advancers and Nike lagging.
The gained 7.52 points, or 0.34 percent, to close at 2,212, with telecommunications leading nine sectors higher while energy and utilities declined.
The Nasdaq composite advanced 24.11 points, or 0.45 percent, to end at 5,333.
About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 867.32 million and a composite volume of 3.736 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded lower, near 11.7.
Gold futures for February delivery fell $6.40 to settle at $1,170.10 per ounce.
—CNBC's Silvia Amaro contributed to this report.
On tap this week:
Tuesday
Earnings: Dave and Buster's, Bob Evans, Oxford Industries
Wednesday
Earnings: Costco, Lululemon Athletica, Brown-Forman, Vera Bradley, H and R Block
10 a.m. JOLTS
3 p.m. Consumer credit
Thursday
Earnings: Sears Holdings, Broadcom, Restoration Hardware, Ciena, Hovnanian
8:30 a.m. Initial claims
Friday
Earnings: Vail Resorts
10 a.m. Consumer sentiment
10 a.m. Wholesale trade