U.S. stocks set fresh records on Tuesday with the Dow Jones Industrial Average closing at a high for the seventh session in a row as it moved within 100 points of the 20,000 milestone ahead of the Federal Reserve’s interest-rate decision Wednesday.

The market is pricing in a nearly 100% chance that the Federal Open Market Committee will lift key interest rates, which leaves much attention on clues for future policy decisions.

The Dow DJIA, -1.92% climbed 114.78 points, or 0.6%, to end at 19,911.21 after touching an intraday high of 19,953.75. Intel Corp. INTC, -2.26% and Exxon Mobil Corp. XOM, -3.20% contributed the most to the rise in the benchmark.

The S&P 500 index SPX, -2.37% rose 14.76 points, or 0.7%, to close at 2,271.72, with nine of the index’s 11 sectors in positive territory. The tech-heavy Nasdaq Composite Index COMP, -3.01% added 51.29 points, or 1%, to finish at 5,463.83.

Both the S&P 500 and Nasdaq ended at record levels with the large-cap index hitting its 18th closing high.

U.S. stocks have rallied since President-elect Donald Trump defeated Democrat Hillary Clinton in an upset victory in the Nov. 8 U.S. election. Investors are betting that Trump’s proposed policies, including corporate tax cuts, infrastructure spending and deregulation, will be unequivocally pro-business.

Read:Peter Schiff sheds no tears as a Trump rally hammers gold, stretches Dow to 20,000

Mike Antonelli, equity sales trader at R.W. Baird & Co., noted that Tuesday’s rally was broad-based, and that tech shares were leading as investors saw attractive valuations across the sector.

“We’re in full breakout mode here,” Antonelli said.

Read:Trump rally could mark biggest postelection stock market rise since Hoover

The central bank will deliver its rate announcement on Wednesday at 2 p.m. Eastern time. The bank is widely expected to raise its benchmark rate by 25 basis points.

With a rate increase essentially a foregone conclusion, investors will closely scrutinize the Fed’s tone for clues to the central bank’s plans for 2017, said James Abate, chief investment officer at Centre Asset Management.

“It’s really going to be expectations for commentary from the Fed related to the pace of rate increases in 2017,” Abate said.

Michelle Meyer, U.S. economist at Bank of America Merrill Lynch, expects Chairwoman Janet Yellen to maintain a cautious tone at her news conference following the Fed’s decision.

“In our view, the risk is for near-term rates to increase and the dollar to strengthen following the meeting,” said Meyer in a note.

Read:Yellen to tell the markets to ‘cool your jets’

The U.S. Dollar Index DXY, +0.02% , a gauge of the greenback’s performance against a basket of six rival currencies, traded at 101.07.

U.S. stocks also benefited from an uptick in demand for risky European assets. Earlier, UniCredit said it plans to shed €17.7 billion ($18.9 billion) in bad debt. The move, which will help to restore Italy’s largest lender to health, assuaged fears about Italy’s troubled banking sector. The European Stoxx 600 SXXP, -1.12% rose more than 1% and Asian markets closed mostly higher.

While many, including Antonelli, expect the equity rally to continue, some noted that the sharp gains seen since the election are beginning look overstretched by several measures.

See:Is stock-market ‘Trumpophoria’ running out of room?

Joe Saluzzi, co-manager of trading at Themis Trading, said one typically reliable indicator, the CNNMoney Fear & Greed Index, has been flashing warning signs for some time. The index stood at 88 on Tuesday, signifying “extreme greed.”

Read:Time to cash in your bank stocks, going by this chart

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Still, the market is expected to maintain its upside momentum in the near term. Indeed, stocks have tended to gain on Fed decision days with the S&P 500 rising an average 0.32% going back to 1994, according to Bespoke Investment Group.

Bespoke Investment Group

Oil prices CLF27, settled modestly higher, but below $53 a barrel.

The International Energy Agency lifted its demand forecasts for 2016 and commitment by members of the Organization of the Petroleum Exporting Countries to cut oil production have boosted oil prices in recent days.

Strong readings on Chinese industrial production and retail sales provided more evidence that the world’s second-largest economy steadied in November, helping to boost global risk sentiment.

See:Will oil output cuts work? Watch these 7 factors

In other economic news, the NFIB small-business index jumped by the largest monthly amount in more than seven years in November on optimism Trump’s administration will spur an increase in business activity.

Stocks on Watch: U.S.-listed shares of Unilever PLC UL, -0.09% ULVR, -0.69% climbed 2.2% after Jefferies upgraded the consumer products company to buy from hold.

Inovalon Holdings Inc. INOV, -0.89% sank 35% after the data-analytics company late Monday slashed its yearly guidance.

VeriFone Systems Inc. US:PAY shares soared 8.6% after topping Wall Street estimates for the quarter in an earnings report released late Monday.

Shares of Valeant Pharmaceuticals International Inc. US:VRX rose 0.7% after the company late Monday said three more executives are leaving the company.

U.S.-listed shares of Anheuser-Busch InBev SA BUD, -3.33% ABI, -1.82% added 1.3% on news that Japan’s Asahi Group Holdings Ltd. 2502, -2.84% will buy five Eastern European beer brands from the brewer.

Apple Inc. AAPL, -4.19% rose 1.7% after The Wall Street Journal reported that the tech giant is eager to invest in a $100 billion fund being raised by Japanese internet and telecommunications giant SoftBank Group Corp. 9984, -4.51% .

--Sara Sjolin contributed to this article.