US close: Stocks notch fresh records as investors eye earnings season

All three of Wall Street's main indices notched record closes on Tuesday as investors looked ahead to the start of earnings season.

The Dow Jones Industrial Average rose 0.4% to 25,385.80, while the S&P 500 and the Nasdaq closed up 0.1% at 2,751.29 and 7,163.58, respectively.

In bond markets, the benchmark 10-year US Treasury note rose 6.2 basis points to 2.542%, hitting its highest level since March 2014.

Oanda analyst Craig Erlam said: "Equity markets in the US are trading at record highs and with high expectations for earnings season already baked in, there may be an element of caution among investors who will be eagerly anticipating the first batch of results."

In corporate news, retailer Target was on the front foot after it posted better-than-expected sales for November and December and bumped up its earnings outlook for this year, while e-commerce company Alibaba nudged up after founder Jack Ma said he would consider a Hong Kong listing.

Medical-device maker Boston Scientific surged after well-received preliminary fourth-quarter and full-year results, while Illumina rallied as it announced a commercial agreement with Thermo Fisher Scientific.

Bucking the trend, Intel shares fell after chief executive Brian Krzanich delivered a speech at CES late on Monday in which he outlined advances in virtual reality and other technologies, but failed to take any blame for the recent security flaws recently detected in its chips.

Under Armour was out of favour after analysts at Susquehanna cut the stock to ‘negative’.

On the data front, the National Federation of Independent Businesses' index of small business optimism fell to 104.9 in December from 107.5 the month before, missing expectations for a reading of 108.4.

Meanwhile, the Fed's JOLTS survey revealed that the number of job openings in the States reached a six-month low in November of 5.88m.

Looking ahead to the rest of the week, investors were watching out for consumer price inflation and retail sales figures for December due out on Friday.

"At a time when questions are being asked about whether the Federal Reserve should be pursuing such aggressive tightening, these numbers are very important in determining whether such a move is warranted or should be halted," said Erlam.

Speaking on Tuesday, Minneapolis Fed chief Neel Kashkari reiterated his dovish policy bias, telling an audience the main concern at present was that inflation was going to continue being low.