Stocks rose as a series of strong earnings reports, coupled with M&A activity, lifted market sentiment.

The Dow Jones Industrial Average rose more than 40 points after closing slightly lower on Monday.

JPMorgan , American Express , and General Electric led blue chips higher, while 3M and Merck slipped.

The S&P 500 broke through resistance levels to trade above 1,250. The Nasdaq also gained. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 16.

The market is heading into end of the year on a strong note. The Dow is up about 4.3 percent for December and 10.1 percent for the year-to-date. For the month, the S&P 500 rose 5.6 percent, while it was up 11.8 percent for the year-to-date. The Nasdaq was up 6.1 percent for December, and 16.8 percent for the year-to-date.

Most key S&P 500 sectors gained on Tuesdsay, led by financials, materials and industrials. Consumer staples and healthcare fell.

Low volumes and a lack of driving economic news could bring volatility in the near term, according to Andrew Kanaly, chairman of Kanaly Trust Company.

"You might be looking for a little selloff here before you jump in completely into this little rally we’ve got on the year end," Kanaly told CNBC.

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