U.S. stocks ended higher on Tuesday, extending gains from the previous session as optimism over a potential narrowing of U.S. tariffs continued to support investor sentiment.

The Dow Jones Industrial Average inched up 4.18 points or 0.01 percent to 42,587.5, while the S&P 500 rose 9.08 points or 0.16 percent to 5,776.65. The Nasdaq Composite gained 83.26 points or 0.46 percent to 18,271.85, marking its third consecutive day of gains.

Among the 11 primary S&P 500 sectors, seven closed higher, with communication services up 1.43 percent and consumer discretionary rising 0.98 percent leading the advances. Utilities fell 1.61 percent and healthcare declined 1.29 percent, making them the biggest laggards.

Investors largely brushed off March's weak consumer confidence report, which showed a sharp decline in U.S. consumers' short-term outlook on income, business conditions, and employment. The Conference Board's consumer confidence index dropped to 92.9, missing expectations of 93.5. The measure of future expectations fell to 65.2, the lowest in 12 years, signaling potential recession risks.

Tuesday's action follows the prior session's sharp gains for all three major averages after U.S. President Donald Trump said he would give "a lot of countries breaks" when it comes to reciprocal tariffs expected on April 2.

"Sentiment continues to wane among investors, consumers and businesses as economic concerns and economic policy uncertainty takes its toll," said Bret Kenwell, U.S. investment analyst at eToro. "Until there's more certainty on the tariff and macro front, sentiment and confidence remain vulnerable."

David Rubenstein, co-founder and co-chairman of the Carlyle Group, said tariffs could slow down the economy, but it wouldn't trigger recession. "Tariffs have done a pretty good job of getting people's attention around the world, getting people's attention in the business community as a negotiating technique," he said Tuesday. "Whether you implement them across the board, all kinds of tariffs everywhere ... that might be more complicated to do and might have some inflationary impact."

In the bond market, the 10-year Treasury yield slipped to 4.315 percent as of 4:18 p.m. EDT, down from 4.33 percent at Monday's close and an intraday peak of 4.37 percent, its highest in over a month.

Mega-cap tech stocks extended Monday's gains, with Tesla climbing another 3.45 percent despite continued weakness in European sales. Apple, Microsoft, Alphabet, Amazon, and Meta Platforms also advanced, while chipmakers Nvidia and Broadcom saw slight declines.

Looking ahead, investors are awaiting earnings reports from Lululemon, GameStop, and Dollar Tree later this week.