The 30-stock index closed 167.80 points higher at 23,441.76, hitting intraday and closing record highs. JPMorgan Chase shares rose 1.6 percent to break above $100 for the first time.
The S&P 500 gained 0.2 percent to finish at 2,569.13, with financials rising to their highest level in 10 years. Corning and 3M were the best performers on the index. The Nasdaq composite advanced 0.2 percent to end at 6,598.43.
"This is very much earnings-driven," said Michael Shaoul, chairman and CEO of Marketfield Asset Management. "The economically sensitive sectors of the S&P 500 have seen some strong earnings and that's what we needed."
Caterpillar reported earnings per share of $1.95 on revenue of $11.413 billion. Analysts polled by Reuters expected a profit of $1.27 per share on sales of $10.649 billion. Caterpillar shares rose 5 percent.
3M shares rose 5.9 percent after the company posted earnings per share of $2.33 on sales of $8.172 billion. Analysts polled by Reuters expected a profit of $2.21 per share on revenue of $7.927 billion.
United Technologies, another Dow component, also reported better-than-expected results; its stock rose as much as 1.98 percent before closing 0.9 percent lower.
General Motors, Eli Lilly and Polaris Industries also rose after reporting earnings.
"It's all about earnings right now. Can they justify valuations? That's the key question right now more so than in recent memory," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
This is the busiest week of the earnings season, with about a third of the S&P 500 expected to have reported by Friday.
U.S. stocks closed lower in the previous session, with the Dow and S&P 500 breaking six-day winning streaks.
On Tuesday, President Donald Trump tweeted after the Dow hit a record: "Stock Market just hit another record high! Jobs looking very good."
Wall Street was also hopeful that tax reform could pick up steam in Washington.
Last week, the Senate passed a budget proposal that allowed Republicans to move closer to eventually passing tax reform — a measure that was approved by a vote of 51-49. The GOP is now reportedly moving quickly to try and get tax reform before the end of the year.
Bloomberg reported Monday that House and Senate leaders laid out a schedule for drafting and releasing tax reform legislation in the next few weeks.
Elsewhere, Politico reported that an administration-backed group met on Monday to plan out a multi-million dollar tax reform campaign.
CNBC reported on Tuesday that House Republicans will unveil a tax bill on Nov. 1.
The prospects of getting tax reform by year's end provide "an upbeat path for the stock market bulls to continue charging ahead," said Ed Yardeni, president and chief investment strategist at Yardeni Research, in a note. "If it turns into a stampede, then the resulting meltup could set the stage for a correction when tax reform is actually enacted."
In economic news, the flash U.S. Composite PMI rose to 55.7 in October, hitting a nine-month high. That release was accompanied by the Richmond Fed survey of manufacturing activity, which showed a slowdown in manufacturing activity in October.