Snap Inc surged 26.6% after the Snapchat messaging app owner beat user growth and revenue forecasts, as more people signed up to chat with friends and family during the COVID-19 pandemic.
The results boosted the shares of social media companies Facebook Inc and Twitter Inc, which were up 4.7% and 7.2%, while image sharing company Pinterest Inc gained 11.6%.
Gains in Facebook and Google-parent Alphabet Inc lifted the communication services sector by 1.8%.
White House Chief of Staff Mark Meadows said the Trump administration and House Democrats shared a goal of reaching an agreement on the stimulus deal in the next 48 hours. The biggest sticking point remained funding for state and local governments, he said, adding that progress has been made toward a deal.
Talks between Treasury Secretary Steven Mnuchin and Democratic House Speaker Nancy Pelosi will continue on Wednesday. The Trump administration has proposed $1.8 trillion in aid, while Democrats are pushing for $2.2 trillion.
"We could expect talks to go on right until the election on Nov. 3, but it is likely (a deal) will be reached which could send markets on an upward trajectory." said Mihir Kapadia, chief executive officer of Sun Global Investments.
The major U.S. stock indexes have traded in a tight range over the past week as investors track progress over stimulus talks.
Wall Street's fear gauge pushed past 30 points to hit a one-month high as the U.S. election campaign entered its final stretch. Democratic challenger Joe Biden and President Donald Trump will face off in their second and final debate on Thursday night.
The race is closer in the battleground states that are likely to decide the winner of the Nov. 3 election, Reuters/Ipsos polling showed, while national polls put Biden well ahead of Trump. At 9:50 a.m. ET, the Dow Jones Industrial Average was up 72.82 points, or 0.26%, at 28,381.61, the S&P 500 was up 15.01 points, or 0.44%, at 3,458.13. The Nasdaq Composite was up 70.16 points, or 0.61%, at 11,586.65.
The energy sector dropped 1.1% as oil prices fell.
Netflix Inc kicked off earnings from the Big Tech club, and was down 4.8% after it missed expectations for subscriber growth as streaming competition increased and live sports returned to television.
Of the 66 S&P 500 firms that have reported third-quarter results, 86.4% have topped expectations for earnings, according to IBES Refinitiv data.
The U.S. central bank's "Beige Book" report, a snapshot of the economy gleaned from discussions with business contacts, is scheduled to be released at 2 p.m. ET (1800 GMT).
Advancing issues outnumbered decliners for a 1.19-to-1 ratio on the NYSE and a 1.23-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and no new low, while the Nasdaq recorded 28 new highs and 11 new lows.
(Reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Shounak Dasgupta)
By Medha Singh