The S&P 500 rose 0.3%, while the Nasdaq Composite advanced 0.6%, and the Dow Jones Industrial Average increased by 354 points, or 0.7%.
Shares of UPS and UnitedHealth rose by 9% and 3%, respectively, after both companies exceeded third-quarter expectations.
PayPal also saw a 5% increase after its recent quarterly results surpassed analysts' forecasts, and it announced a partnership with OpenAI to integrate its digital wallet into ChatGPT.
The earnings season kicked off strongly, with about one-third of S&P 500 companies reporting their financial results, and 83% of them exceeded profit expectations according to FactSet.
Many leading companies are set to report their financial results this week, including Alphabet, Amazon, Apple, Meta Platforms, and Microsoft, which collectively represent nearly a quarter of the total value of the S&P 500. Amazon announced it would begin layoffs on Tuesday, marking the largest workforce reduction in the company's history.
Tuesday also marks the beginning of a two-day Federal Reserve meeting, where the central bank is expected to lower the benchmark interest rate for the second time this year.
Traders are looking for signals from Fed Chair Jerome Powell on further rate cuts at the last meeting of the year in December, amid concerns about a weakening labor market. The Fed is also facing a blackout on economic data due to the ongoing U.S. government shutdown.
Adam Turnquist, chief technical strategist at LPL Financial, stated, "Another wave of strong earnings, signs of easing inflation pressures, and strong expectations for rate cuts have fueled buying pressure."
Investors welcomed the easing of tensions between the U.S. and China ahead of the anticipated meeting between President Trump and President Xi Jinping. The two countries have agreed on a framework for a potential trade agreement.
The S&P 500 recorded its first-ever close above 6800 in the previous session, while the Nasdaq and Dow Jones closed at record levels.
Consumer confidence fell to 94.6 points in October, the lowest level since April.
Shares of Apple and Microsoft rose on Tuesday, pushing their market capitalizations above $4 trillion, although Nvidia remains the most valuable company in the world.