Stocks closed near session highs Tuesday, with the S&P 500 posting its sixth-consecutive rally, following another upbeat round of data from China and as fears over an imminent strike on Syria receded.
"The cautious tone we've seen in the past few days has abated," said Tom DeMarco, market strategist at Fidelity Capital Markets. "We had some better news out of China overnight, which is giving investors some cheer in terms of global economic potential, and the geopolitical situation looks like tensions may be lessening, which would be positive for markets as well."
The Dow Jones Industrial Average bounced 127.94 points, to close at 15,191.06, lifted by Microsoft and General Electric, extending gains after rallying nearly 1 percent in the previous session. The blue-chip index logged its first consecutive triple-digit gains since June.
Meanwhile, Goldman Sachs, Visa and Nike will join the Dow Jones Industrial Average, replacing Alcoa, Bank of America and Hewlett-Packard. The changes will be effective with the opening of trading on Sept. 23, S&P Dow Jones Indices said in a statement. The index changes were prompted by the low stock price of the three companies slated for removal and the index committee's desire to diversify the sector and industry group representation of the index.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, declined below 15.
Despite initial worries over a September swoon in equities, the Dow has rallied nearly 2.5 percent for the month so far, while the S&P 500 and the Nasdaq have jumped more than 3 percent each.
All key S&P sectors ended higher, led by financials and industrials.
Apple slipped in choppy trading after the tech giant unveiled two new iPhones—the iPhone 5C and the iPhone 5S—during its media event. Apple's lower-cost iPhone is intended to appeal to budget-conscious consumers and those in emerging markets, such as China. The iPhone 5S comes with a faster processor and a fingerprint sensor, called Touch ID.
(Read more: Apple live blog:Here come the new iPhones)
Interestingly, Birinyi Associates noted that Apple has outperformed the S&P 500 index 91 percent of the time by an average of 4.3 percent in the one month leading to a product introduction. However, during the following three months, the stock has lagged the market 73 percent of the time by an average of 2.1 percent .
Meanwhile, President Barack Obama said on Monday that he was uncertain whether he will win the Congressional vote to authorize military action, and was undecided whether he would order a strike without Congress's support.
"I'm taking this vote in Congress and what the American people are saying very seriously," Obama told NBC News.
Obama is scheduled to address the U.S. public on Syria on Tuesday evening.
Meanwhile, Russia has offered a non-military solution to the crisis by asking Damascus to put its chemical weapons under international control.
McDonald's ticked higher after the fast-food giant reported a better-than-expected 1.9 percent increase in same-store sales in August, helped by stronger performance in Europe.
Bank of America edged higher after Bloomberg reported that the second-largest U.S. lender planned to cut nearly 2,100 jobs and close 16 mortgage offices. A spokesman said the changes reflected the bank's "ongoing efforts to streamline our facilities and align our cost structure with market realities."
Among earnings, ConAgra slumped after the maker of Chef Boyardee pasta and Slim Jim beef jerky estimated first-quarter earnings below Wall Street expectations and also cut its fiscal 2014 profit outlook.
Treasury sold $31 billion in 3-year notes at a high yield of 0.913 percent. The bid-to-cover ratio, an indicator of demand, was 3.29, versus a recent average of 3.36.
Stocks rallied at the open, lifted by data for August showed that Chinese industrial output rose 10.4 percent on the year, topping consensus estimates. Retail sales and fixed income asset investment also posted stronger-than-expected gains.
(Read more: Impressive China data fuels optimism on growth)
China's benchmark index hit a new three-month high for a second consecutive session following the news. South Korea's Kospi also reached a three-month peak and the Japanese Nikkei hit a one-month high.
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)