Wall Street's main indexes all advanced and the Nasdaq scored a record closing high as Federal Reserve Chair Jerome Powell reassured investors while they digested Tuesday's data and waited for Wednesday's crucial consumer inflation report.

U.S. producer prices increased more than expected in April as the cost of services and goods rose sharply, leading traders to pare back bets of a first rate cut in September.

But Powell on Tuesday described the producer price index report as more mixed than hot given that prior-period data was revised lower.

Investors also found reassurance in Powell's comment that he did not expect the central bank's next interest rate move to be a hike, despite the recent run of higher-than-expected inflation.

"The market is getting more comfortable with higher-for-longer rates. The real question has been lately if a hike is a possibility and Powell's reiterating that it's not on the table right now," said Lindsey Bell, chief strategist, 248 ventures, Charlotte, North Carolina. Bell also noted that stocks appeared to gain ground during the session as Treasury yields declined.

"It seems that the bond market is digesting all this and the stock market is reacting to the bond market."

Investors awaited Wednesday's Consumer Price Index figures to assess whether upside surprises in the first quarter extended into April.

Sticky inflation and persistent labor market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut to September, from March seen at the start of the year.

Still, stocks have rallied so far this year, with all three major U.S. indexes hovering near fresh record highs thanks to better-than-expected earnings for the first quarter.

According to preliminary data, the S&P 500 gained 24.21 points, or 0.46%, to end at 5,245.63 points, while the Nasdaq Composite gained 121.11 points, or 0.74%, to 16,509.34. The Dow Jones Industrial Average rose 119.96 points, or 0.30%, to 39,551.47.

Also supporting the indexes on Tuesday was an advance in shares market heavyweight Alphabet after the Google parent showed how it is using artificial intelligence (AI) across its businesses, including a beefed-up Gemini chatbot and improvements to its prized search engine.

Shares in Home Depot pared losses after falling more than 2% on news that the retailer's quarterly same-store sales fell more than expected as Americans focused on small-scale home projects, spending less on big-ticket items.

U.S.-listed shares of Alibaba declined after it reported an 86% drop in fourth-quarter profit.

On Holding rallied as the footwear maker raised its annual sales forecast after beating quarterly sales expectations, citing strong demand for its running shoes.

U.S. President Joe Biden unveiled a bundle of steep tariff increases on an array of Chinese imports including electric vehicles, computer chips and medical products.

U.S.-listed shares of Chinese EV maker Li Auto fell while Tesla gained ground.

GameStop shares extended their recent rally after flag bearer Roaring Kitty posted on X.com for the first time in three years.

Other 2021 meme rally participants and highly shorted stocks AMC Entertainment and Koss Corp also advanced.