Stocks rose on Tuesday amid news that U.S. lawmakers had secured a tentative deal on border security funding. Improved prospects for a U.S.-China trade deal also boosted equities.

The Dow Jones Industrial Average rose 372.65 points to close at 25,425.76, led by Caterpillar and 3M. The climbed 1.3 percent to 2,744.73 as materials, consumer discretionary and financials outperformed. The S&P 500 also closed above its 200-day moving average — a closely watched level by traders — for the first time since Dec. 3. The Nasdaq Composite advanced 1.46 percent to 7,414.62.

Shares of big banks gained broadly. The SPDR S&P Bank ETF (KBE) jumped 1.2 percent. Goldman Sachs, Citigroup and Morgan Stanley all rose at least 1.6 percent. Bank of America and J.P. Morgan Chase also gained at least 1 percent.

"It appears as though the government shutdown was avoided. That's good news for the market. That headwind goes away," said Art Hogan, chief market strategist at National Securities.

On Monday night, congressional negotiators struck a deal in principle that would keep the government open and avoid a shutdown on Friday. The drafted agreement did not contain funds for President Donald Trump's border wall, however. If the government is going to avoid another shutdown, it will need support from Trump.

The government was shut down for 35 days until Jan. 25, the longest one in history, as Trump and congressional leaders could not come to terms on funding for a wall along the U.S.-Mexico border.