Wall Street has advanced as the prospect of additional stimulus and a record jump in retail sales suggested the US economy could bounce back sooner than expected, five months into its pandemic-inflicted recession.
All three major US stock indexes have posted their third consecutive daily gains.
The Dow and the S&P remain about 11 per cent and eight per cent below their respective record closing highs reached in February, while the tech-heavy Nasdaq hovers about one per cent below its all-time closing high reached on June 10.
Data released by the Commerce Department showed retail sales jumped by a record 17.7 per cent in May, blowing past the eight per cent increase analysts expected.
Investor risk appetite was given a further boost by the Trump administration's anticipated $US1 trillion dollar infrastructure package aimed at jump-starting the economy.
Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, said the May retail data was the biggest driver.
"The retail sales numbers is the story that's driving markets higher," he said.
"But the smell of stimulus in the air is adding to today's gains for sure."
Amid a resurgence of new COVID-19 cases in China and the US, along with unabated progression of the pandemic in Latin America and elsewhere, a UK-led drug trial showed low doses of generic steroid drug dexamethasone reduced COVID-19 death rates among the most severe cases.
"We got potentially more positive news in the fight against COVID-19," Detrick added.
"But while COVID is in most peoples' minds, in the stock market's view it is all about reopening and the strong data suggest the recovery is happening and faster than most expected."
Federal Reserve Chairman Jerome Powell was cautious on Tuesday at the beginning of his two-day testimony before Congress.
"Until the public is confident that the disease is contained, a full recovery is unlikely," he said.
The Dow Jones Industrial Average rose 526.82 points, or 2.04 per cent on Tuesday, to 26,289.98, the S&P 500 gained 58.15 points, or 1.90 per cent, to 3,124.74 and the Nasdaq Composite added 169.84 points, or 1.75 per cent, to 9,895.87.
All 11 major sectors of the S&P 500 ended the session well in the black, with energy and healthcare leading the charge.
The upbeat retail sales data helped push S&P 500's Retail index 2.3 per cent higher, led by Nordstrom and Kohls, which surged by 12.9 per cent and 9.0 per cent, respectively.
Much stronger than expected homebuilder sentiment data helped home improvement retailer Home Depot provide among the biggest boosts to the blue-chip Dow. Its shares rose 3.6 per cent.
Shares of Eli Lilly surged 15.7 per cent after announcing its breast cancer therapy's success in a late-stage study.
Oracle was up 2.5 per cent after Wells Fargo hiked its price target on the company's shares ahead of its earnings release expected after the bell.
Streaming platform Roku rose 12.4 per cent in heavy volume, with no clear impetus, and the company declined to comment.
Advancing issues outnumbered declining ones on the NYSE by a 4.42-to-1 ratio; on Nasdaq, a 3.05-to-1 ratio favoured advancers.
The S&P 500 posted seven new 52-week highs and no new lows; the Nasdaq Composite recorded 97 new highs and seven new lows.
Volume on US exchanges was 12.87 billion shares, compared with the 12.95 billion average over the last 20 trading days.