Each of the 11 major S&P sectors was higher, led by economically sensitive stocks such as industrials, which climbed to a record, along with the financials, up 2.8% and energy, up 4.2%.

President Donald Trump finally gave the green light for the formal transfer of power to begin on Monday, a process that was delayed for weeks despite Democrat Joe Biden emerging as the clear winner in the elections. The General Services Administration told Biden he could formally begin the hand-over process.

"You had the GSA transitioning and Trump saying he is going to cooperate. That is a positive," said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta.

"Nobody was worried about it, but just the fact you're greasing the wheels for the transition instead of trying to throw a monkey wrench in them is decent news."

The Dow Jones Industrial Average rose 395.22 points, or 1.34%, to 29,986.49; the S&P 500 gained 51.48 points, or 1.44%, at 3,629.07 and the Nasdaq Composite added 140.41 points, or 1.18%, at 12,021.05.

Recent data suggesting a COVID-19 vaccine could be available before the end of the year has put the S&P 500 on course for its best November ever and sparked demand for value-linked stocks that were hammered following the coronavirus-driven crash earlier this year.

U.S. officials said on Tuesday they plan to release 6.4 million COVID-19 vaccine doses nationwide in an initial distribution after the first one is cleared by regulators for emergency use.

Sentiment this week was also boosted by reports that Biden planned to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary, which could shift the focus heavily toward efforts to tackle growing economic inequality.

Electric-car maker Tesla Inc jumped 6.7%, boosting its market value to over $500 billion, as investors lapped up its shares in the run-up to its addition to the S&P 500 index.

Boeing Co gained 2.8% after European regulators gave draft approval to its 737 MAX jets, paving the way for a formal flight clearance in January.

BlackRock Inc, the world's largest asset manager, on Monday upgraded U.S. equities to "overweight," turning bullish on quality large-cap technology companies and small cap firms that tend to perform well during a cyclical upswing.

Still, with coronavirus cases surging by the day and millions of Americans still unemployed, some analysts suggested the U.S. stock market could be prone to a pullback from record levels in the next few weeks.

Advancing issues outnumbered decliners on the NYSE by a 3.29-to-1 ratio; on Nasdaq, a 1.95-to-1 ratio favored advancers.

The S&P 500 posted 54 new 52-week highs and no new lows; the Nasdaq Composite recorded 192 new highs and nine new lows.