- The Nasdaq composite soared above 6,000 for the first time ever.
- The Dow jumped more than 200 points, briefly breaks back above 21,000.
- "Earnings and tax reform are the main story" in the market, says Baird's Bittles.
U.S. equities rose sharply on Tuesday as solid quarterly reports from several large-cap companies rolled through.
The Nasdaq composite jumped about 0.7 percent, sending the index above 6,000 for this first time ever.
"It's certainly a psychological factor," said Jeff Carbone, managing partner of Cornerstone Financial Partners. "It took us many years to get back above 5,000 and now we're at 6,000. But you've got to be careful."
He noted that about 40 percent of the index is being driven by five companies: Amazon, Facebook, Netflix, Alphabet and Apple. "If we see a downturn in those names," the index could be in trouble.
The Dow Jones industrial average rose about 230 points, with Caterpillar and McDonald's contributing the most gains and briefly broke above 21,000. The S&P 500 advanced 0.6 percent, with materials rising more than 1 percent to lead advancers.
"I think we've come to believe that Q1 is soft because of some reason that economists or market analysts haven't been able to pinpoint," said Kim Forrest, senior equity analyst at Fort Pitt Capital. "That doesn't seem to be happening now."
Here are some of the firms that posted quarterly results before the bell:
- Caterpillar: posted EPS of $1.28 and sales of $9.822 billion, versus expected EPS of 62 cents and $9.271 billion revenue forecast.
- McDonald's: posted EPS of $1.47 and revenue of $5.68 billion, versus expected EPS of $1.33 and sales of $5.53 billion.
- 3M: posted EPS of $2.16 and revenue of $7.685 billion, versus expected EPS of $2.06 and sales of $7.472 billion.
- DuPont: posted EPS of $1.64 and sales of $7.743 billion, versus expected EPS of $1.39 and revenue of $7.504 billion.
"Earnings thus far have been good," said Peter Cardillo, chief market economist at First Standard Financial. "That's a good sign that Corporate America is on a renewed path toward growth."
More than 190 S&P components are expected to have reported by the end of the week. Other big names scheduled to release quarterly results this week include Boeing, Amazon, Alphabet, Microsoft and General Motors.
The major U.S. stock indexes soared on Monday after the first round of the French presidential election went as most investors expected. Centrist Emmanuel Macron advanced to the runoff against far-right candidate Marine Le Pen. The runoff is scheduled for May 7.
"I have to say I was surprised because what happened with Marine Le Pen is what we were expecting. So why get got a bump off that is interesting," said Maris Ogg, president at Tower Bridge Advisors. "But I think that removed a big cloud [over the market] and people are starting to focus on the fundamentals again."
The Dow soared more than 200 points, while the S&P and Nasdaq climbed about 1 percent.
Nevertheless, investors also zeroed in on Washington, as President Donald Trump tried to avoid a government shutdown. Government funding will end Friday unless Congress can agree on at least a temporary funding resolution.
The Trump administration is also expected to release an outline to potential tax reform later this week. Tax reform expectations have been one of the key market drivers since the presidential election.
"Earnings and tax reform are the main story" in the market, said Bruce Bittles, chief investment strategist at Baird. "For two months, we were in a consolidation phase and now we have the Nasdaq at an all-time high."
Overseas, European equities rose broadly, with the pan-European Stoxx 600 index 0.21 percent. In Asia, stocks closed mostly higher, with the Shanghai composite rising 0.16 percent and the Nikkei 225 advancing 1.08 percent.
In economic news, U.S. home prices rose more than expected in February, according to new data from the S&P/Case-Shiller U.S. National Home Price Index.
The national home price index jumped 5.8 percent in February, while analysts were expecting home prices to climb by 5.7 percent.
New home sales rose 5.8 percent to 621,000 in March, above expectations. Consumer confidence held at 120.3 for April.
The Dow Jones industrial average rose 232.23 points, or 1.12 percent, to close at 20,996.12, with Caterpillar leading advancers and Verizon the top decliner.
The gained 14.46 points, or 0.61 percent, to close at 2,388.61, with materials leading nine sectors higher and telecommunications and utilities lagging.
The Nasdaq advanced 41.67 points, or 0.7 percent, to end at 6,025.49.
About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 930.29 million and a composite volume of 3.987 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.8.
—CNBC's Lauren Thomas contributed to this report.
On tap this week:
Earnings: Boeing, Daimler, Fiat Chrysler, Pepsico, United Technologies, GlaxoSmithKline, Anthem, Alaska Air, Northrop Grumman, General Dynamics, Dr. Pepper Snapple, Hershey, Norfolk Southern, State Street, Credit Suisse, Hess, Seagate Technology, Twitter, Nasdaq, Amgen, Paypal, F5Networks, Tractor Supply, Buffalo Wild Wings, Boston Beer, SixFlags, CR Bard, Whiting Petroleum, Suncor
Earnings: Alphabet, Microsoft, Intel, Amazon.com, Raytheon, Baidu, Starbucks, Expedia, Comcast, Bristol-Myers Squibb, Flex, GoPro, Western Digital, Vertex , Sirius XM Radio, Under Armour, American Airlines, Southwest Air, MGM Growth, Generac, Domino's Pizza, CME Group, KKR, Johnson Controls, Union Pacific, UPS, Total, Celgene, Deutsche Bank, Alexion Pharma, Nintendo, AbbVie, Bayer, Air Products
7:45 a.m. ECB rate decision
8:30 a.m. ECB President Mario Draghi press briefing
8:30 a.m. Jobless claims
8:30 a.m. Durable goods
8:30 a.m. Advance econ indicators
10:00 a.m. Pending home sales
10:00 a.m. Housing vacancies
Earnings: Exxon Mobil, Chevron, Colgate-Palmolive, Honda Motor, Barclays, UBS, Sony, Synchrony Financial, Spirit Airlines, Autoliv, Sanofi, Spirit Airlines, Goodyear Tire, Calpine, Cabot Oil and Gas, Phillips 66, Weyerhaeuser
8:30 a.m. Q1 adv Real GDP
9:45 a.m. Chicago PMI
10:00 a.m. Consumer sentiment
2:30 p.m. Philadelphia Fed President Patrick Harker