The Dow Jones Industrial Average rose 149.22 points, or 0.68 percent, to 22,007.54, the S&P 500 gained 24.42 points, or 1.00 percent, to 2,465.74 and the Nasdaq Composite added 74.74 points, or 1.19 percent, to 6,331.30.
The ICE U.S. Dollar Index DXY, +0.50% a gauge of the greenback against a half-dozen rivals, was up 0.6% on Tuesday after further strengthening on the upbeat economic data.
The Dow is up 2,231.11 points, or 11.3 percent. Nvidia (NVDA) and Micron (MU) posted standout gains.
Oil prices held steady after Monday's heavy selloff, weighed by a strong USA dollar - which makes oil more expensive for overseas buyers - and signs of weaker demand in China, the world's second-largest consumer. According to the Associated Press, South Korea's Kospi lost 1.7 percent, while Hong Kong's Hang Seng slid 2 percent.
The Canadian dollar was trading lower at 78.4 cents U.S. Against the euro, the dollar is valued at $1.1706 compared to yesterday's $1.1780.
U.S. Treasury benchmark yields rebounded from six-week lows as the easing of tensions with North Korea led investors to pare back their holdings of low-risk government debt.
Gold fell on Monday as the USA dollar inched up from last week's lows, but held near two-month highs touched on Friday as investors kept a close watch on any developments on tensions over the Korean peninsula.
The wider S&P 500 index was up 0.9% at 2,462.48, while the Nasdaq climbed 1% to 6,315.90.
Last week the dollar fell to an eight-week low against the Japanese yen.
The S&P index was on track for its biggest single-day percentage gain since April. Australian stocks closed up 0.5%.
The greenback advanced for a second day after comments from Federal Reserve Bank of NY chief William Dudley boosted expectations for an interest-rate increase this year.
A couple of economic reports are making headlines.
Data for July showed the biggest increase in USA retail sales in seven months as consumers ramped up discretionary spending and boosted purchases of motor vehicles, suggesting the economy continued to gain momentum.
After days of escalating rhetoric between the US and North Korean leaders, Pyongyang's state media reported Tuesday that Kim Jong Un decided not to launch a threatened missile attack on Guam. Those concerns had helped to wipe out almost $1 trillion from global equity markets last week. [O/R]"We're going to get some more information on retailers this week".
German potash miner K+S plunged 5 percent after its Q2 results fell short of market expectations.
Investors are looking to a report on US retail sales due Tuesday for their next clue on the trajectory of USA inflation.
Core Retail Sales are expected to grow 0.3%.
Excluding a jump in sales by motor vehicle and parts dealers, retail sales still rose by 0.5 percent in July following a 0.1 percent uptick in June. Ex-auto sales had been expected to increase by 0.3%.
At 10 am ET, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of August.
Retail sales in July rose at a faster pace than anticipated, reaching a seven-month high in a positive sign that consumers were spending in the first month of the third quarter.