US stocks traded higher on Tuesday as investors continued to monitor the progress of the country's tax reform.

At midday, the Dow Jones Industrial Average added 8.46 points, or 0.04 per cent, to 24,298.51, Xinhua news agency reported.

The S&P 500 increased 7.76 points, or 0.29 per cent, to 2,647.20. The Nasdaq Composite Index was up 50.65 points, or 0.75 per cent, to 6,826.01.

The US Senate on Saturday narrowly passed the Republican bill to overhaul the tax code in decades, moving one step closer to the first major legislative victory of the Trump administration and congressional Republicans.

The House of Representatives had passed its own version of tax reform legislation last month, which contained significant differences from the Senate version.

Republicans currently plan to convene a conference in the next few weeks to reconcile the House and Senate versions.

Overhauling the tax code is a top priority of Republicans and they are hoping to send the final legislation to President Donald Trump before Christmas.

Analysts said market sentiment was boosted by the prospect of the tax bill, sending the Dow Jones Industrial Average to record highs on Monday.

In corporate news, shares of Bank of America rose 0.7 per cent around midday after the bank announced it would buy back an additional 5$ billion in stock. The repurchase will take place through June 2018.