Dow S&P 500 and Nasdaq set record highs

U.S. stocks traded higher on Tuesday, building on strong gains from their previous session.

The Dow Jones industrial average rose 60 points to set a record high, with UnitedHealth contributing the most to the gains. The S&P 500 gained 0.1 percent and also set a record, with telecommunications leading advancers. The Nasdaq composite advanced 0.1 percent and also set a record.

"I think this rally is probably going to extend itself," said Peter Cardillo, chief market economist at First Standard Financial. "There are a lot of challenging factors out there, but equities seem to brush that aside."

"If we have a positive week, that could set the tone for what we could see the rest of the year," Cardillo said.

Stocks posted record highs across the board on Monday, led by strong gains in health care and financials. While some Wall Street experts have expressed concern over equity valuations, billionaire Warren Buffett said they made sense given where interest rate are. Buffett said rates have been a "powerful factor" in equity values.

The Federal Reserve has raised interest rates twice this year, with investors largely expecting a third rate hike in December, according to the CME Group's FedWatch tool.

The central bank "has somewhat of a reputation as the matador that dispatches bull markets with the sword of policy mistakes," said Nicholas Colas, co-founder of DataTrek Research, in a note to clients. Colas added, however, he does not see this happening. "Short-term rates are still very low by historical standards. And long-term rates seem fine with the Fed's stated balance sheet reduction goals."

"Short-term rates are still very low by historical standards. And long-term rates seem fine with the Fed's stated balance sheet reduction goals," Colas said.

Treasury yields fell on Tuesday. The short-term two-year yield slipped to 1.47 percent, while the benchmark 10-year yield fell to 2.33 percent.

In economic news, monthly auto sales data will be released throughout the day.

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