Stocks are holding on to their gains for the year. The Dow Jones is up 8.4 percent since the start of the year, while the S&P 500 has gained 13.5 percent.
The Federal Reserve is expected to announce a new bond-buying plan to support the U.S. economy with the goal of further reducing long-term interest rates and encouraging borrowing by companies and individuals. Once its two-day policy meeting ends Wednesday, the Fed is likely to say it will start buying more long-term Treasurys to replace a program that expires at year's end.
"I would be a huge shock to the system if it wasn't continued," said Dave Abate, a senior wealth advisor with Strategic Wealth Partners in Seven Hills, Ohio. "The markets across the boards are pricing in a continuation of the stimulus."
Investors were also encouraged by a report that showed an index of German investor optimism rose more than expected in December, suggesting market professionals think Europe's largest economy will avoid an outright recession.
The yield on the 10-year Treasury note rose 4 basis points to 1.66 percent.
Other stocks making big moves:
—Urban Outfitters rose $1.65, or 4.5 percent, to $38.65 after the company reported rising sales. The retailer, which operates Anthropologie, Free People and its namesake stores, reported its third-quarter results in November, which fell just short of market expectations.
—Dollar General fell $3.63, or 7.8 percent, to $42.94 after the company said that while its sales over the Thanksgiving weekend and the start of the holiday shopping season were encouraging, it remains cautious about the rest of the year, noting that consumer spending remains tight.
— TripAdvisor jumped $2.52, or 6.6 percent, to $40.91. Liberty Interactive agreed to increase its stake in the travel website by buying a block of shares from media mogul Barry Diller and The Diller-von Furstenberg Family Foundation. Liberty will gain control of the company.