U.S. equities closed higher on Tuesday as large-cap technology stocks came back from their biggest two-day decline since December.
The Dow Jones industrial average advanced about 90 points to hit intraday and closing records, with 3M and Goldman Sachs the most gains. Apple also contributed gains to the 30-stock index.
The S&P 500 gained about half a percent on its way to a record close, with information technology and materials leading advancers. Shares of Apple, Google-Parent Alphabet and Tesla all rose, pushing the Nasdaq composite 0.7 percent higher.
"We don't want to dramatically overweight the [tech] sector, but we still want to participate in it," said John Traynor, CIO at People's United Bank. "You're seeing some good top-line growth in these names."
Katie Stockton, chief technical strategist at BTIG, said the Nasdaq 100 futures had taken a respite Tuesday before the bell "from the pullback that has characterized the technology sector in the last two days."
"There is room to short-term oversold territory, so we would assume the pullback still has a hold, although it is likely to mature in the next few days," Stockton said.
Technology stocks have easily outperformed this year, with the S&P information technology sector advancing 17.6 percent. By comparison, health care — the second-best performer in the S&P — had risen 12.1 for 2017 entering Tuesday's session.
The Nasdaq completed a 2.31 percent two-day pullback on Monday as valuation concerns around the sector escalated.
A survey of fund managers released Tuesday by Bank of America Merrill Lynch showed the Nasdaq at the top of the most-crowded trade list. The survey also showed that 84 percent of fund managers believe the U.S. is the most overvalued equity market.
Still, it's "important to note that the last two days have shown little to no real signs of weakness with pullback attempts in S&P, DJIA holding and rallying back to unchanged," said Mark Newton, managing partner at Newton Advisors, in a note.
"The Tech selloff looks nearly complete in the short run with XLK ... down to weekly support near trendlines from last November," he said.
Investors also kept an eye on the Federal Reserve as the central bank kicked off a two-day monetary policy meeting on Tuesday. Investors largely expect the central bank to raise interest rates by a quarter point. Market expectations for a June rate hike were 99.6 percent, according to the CME Group's FedWatch tool.
Investors will also look for clues about how the Fed plans to unwind its massive $4.5 trillion balance sheet.
The Fed opened that can of worms a few meetings ago," said Minh Trang, senior FX trader at Silicon Valley Bank. "At this point, there could be a dual-policy approach with raising rates on one hand and reducing the balance sheet on the other."
In economic news, the National Federation of Independent Business' (NFIB) small business optimism index came in unchanged at 104.5 for May.
Meanwhile, U.S. producer prices remained unchanged last month as energy costs recorded their biggest decline in more than a year, suggesting inflation pressures were easing after rising at the start of the year.
Major U.S. Indexes
The Dow Jones industrial average rose9 2.80 points, or 0.44 percent, to close at 21,328.47, with DuPont leading advancers and General Electric lagging.
The gained 10.96 points, or 0.45 percent, to end at 2,440.35, with materials leading 10 sectors higher and telecommunications the only decliner.
The Nasdaq advanced 44.90 points, or 0.73 percent, to close at 6,220.37.
About three stocks advanced for every decliner at the New York Stock Exchange, with an exchange volume of 825.52 million and a composite volume of 3.252 billion at the close.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.6.
—Reuters contributed to this report.
On tap this week:
Wednesday
8:30 a.m. Retail sales
8:30 a.m. CPI
10:00 a.m. Business inventories
2:00 p.m. FOMC Statement
2:30 p.m. Fed Chair Janet Yellen briefing
Thursday
8:30 a.m. Initial claims
8:30 a.m. Import prices
8:30 a.m. Empire state manufacturing
8:30 a.m. Philadelphia Fed survey
9:15 a.m. Industrial production
10:00 a.m. NAHB survey
4:00 p.m. TIC data
Friday
8:30 a.m. Housing starts
8:30 a.m. Business leaders
10:00 a.m. Consumer sentiment
12:45 p.m. Dallas Fed President Rob Kaplan