President Donald Trump comments that he did not anticipate another government shutdown added to sentiment, even though he expressed unhappiness about the agreement that includes funds for US-Mexican border security but not for his promised wall.
The S&P 500 index crossed its 200-day moving average price on Tuesday, a technical level that indicates long-term momentum, for the first time since Dec. 4.
The benchmark index is now just about 7 percent away from its Sept. 20 record closing high, boosted by an upbeat fourth-quarter earnings season, a dovish Federal Reserve and trade optimism.
"The fact that lawmakers want to leave the government open sounds like one of the biggest drivers for markets today," said Gary Bradshaw, portfolio manager with Hodges Funds in Dallas.
Top US officials arrived in the Chinese capital on Tuesday for high-level trade talks as the world's two largest economies attempt to strike a deal before a March 1 deadline and avoid another escalation of tariffs.
Trump said he would consider pushing the deadline if the two sides were close to a deal.
Trade-sensitive industrials climbed 1.52 percent, boosted by Boeing Inc and Caterpillar Inc.
Chipmakers, which depend on China for a huge chunk of their revenue, also rose and pushed the Philadelphia chip index 1.92 percent higher.
The broader technology sector rose 1.28 percent, lifted by gains in Apple Inc, Microsoft Corp and Intel Corp.
Amazon.com Inc rose 2.24 percent and was the biggest boost to the S&P 500 and Nasdaq.
In the latest data underscoring the economy's strength, US job openings surged to a record high in December.
At 12:41 p.m. ET, the Dow Jones Industrial Average was up 337.49 points, or 1.35 percent, at 25,390.60. The S&P 500 was up 32.98 points, or 1.22 percent, at 2,742.78 and the Nasdaq Composite was up 96.36 points, or 1.32 percent, at 7,404.27.