At the close of trade, the Dow Jones Industrial Average index advanced 116.26 points, or 0.38%, to 30,930.52. The S&P 500 index added 30.66 points, or 0.81%, to 3,798.91. The tech-heavy Nasdaq Composite Index rose 198.68 points, or 1.53%, to 13,197.18.

Investors focused on a potential bigger stimulus package from President-elect Joe Biden who will be sworn into office Wednesday. Biden is expected to ask Congress to approve a $1.9 trillion coronavirus relief plan, which focuses on unemployment, housing, education, and COVID-19 testing, to stimulate the US economy. A second bill, expected in February, is planned to include broader measures, such as job creation, lowering unemployment and fighting racial inequality and climate change.

Traders also kept an eye on remarks from Treasury Secretary nominee Janet Yellen during her confirmation hearing before the Senate Finance Committee. In prepared remarks, Yellen called for additional stimulus to address the impact of the ongoing coronavirus pandemic, arguing the government needs to "act big." Yellen acknowledged the mounting national debt facing the incoming administration but claimed the benefits of another relief package will far outweigh the costs.

Eight of 11 S&P sectors advanced, with economy-linked energy , financial and industrials among the biggest gainers. The defensive utilities, consumer staples and real estates were the only ones in the red.

Shares of Bank of America (-0.7%) and Goldman Sachs (-2.3%) both topped fourth-quarter profit estimates but their shares traded lower as investors took profits following a sharp surge over the last two weeks. Boeing shares gained 3.1% as Canada said it would lift a near two-year flight ban on its 737 MAX aircraft. Shares of Tesla rose 2.2% after Jefferies raised its earnings estimates. General Motors (+9.8%) shares hit record highs after Microsoft (+1.8%) invested in its self-driving start up.