"Unless something major comes along to derail this rally, it just seems like the market is going to keep climbing higher," said Marty LeClerc, managing partner of Barrack Yard Advisors in Bryn Mawr.
Factory orders surged in February, helped by stronger demand for commercial aircraft. Overall orders for durable goods, a catchall term for products ranging from refrigerators to jumbo jets, jumped 5.7 percent from the previous month, the Commerce Department said. It was the biggest increase in five months.
All 10 industry groups in the S&P 500 rose, led by health-care and energy companies. But smaller companies, which have been beating the market all year, didn't do as well. The Nasdaq composite rose 17.18 points, or 0.5 percent, to 3,252.48, and the Russell 2000 rose 3.97 points, or 0.4 percent, to 949.82.
Big-company stocks and small-company stocks often part ways, said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. Recently, Europe has been the reason. Big corporations generally do more business in Europe, and their stocks had wavered over the last week as traders watched negotiations to rescue Cyprus.
After a deal was announced Sunday, there was still uncertainty on Wall Street Monday. But by Tuesday, investors seemed back to focusing on the U.S. economy, and stocks of big companies rose the most.
By contrast, smaller companies are less exposed to the rest of the world. "That's part of the reason small-caps have outpaced the market this year," Ablin said. The Russell 2000 is up 11.8 percent this year, compared with 9.7 percent for the S&P 500.
Netflix surged 5 percent Tuesday, leading the S&P 500, after an analyst at Pacific Crest Securities said the stock will likely climb as the company continues to add subscribers. It rose $9.82, to $190.61.
Housing prices increased in January at the fastest pace since summer 2006. The Standard & Poor's/Case-Shiller index of prices in 20 cities was up 8.1 percent over January 2012. That compared with a 6.8 percent year-over-year increase in December. Prices rose in all 20 cities, led by 23.2 percent in Phoenix and 17.5 percent in San Francisco.
Reports Tuesday added to evidence that the economy is slowly improving, and that's what many investors want right now, LeClerc said. Slow growth and continued low inflation mean it could be a long time before the Federal Reserve starts unraveling its bond-buying program and raising interest rates.