Next up: 2,100 on the S&P 500

"The Santa rally already started. It (S&P) moved 5 percent from last Thursday. Maybe it will digest a little bit in the next few days," said Scott Redler, partner with T3Live.com. "With low volume, digestion would be nice because that would reset the market for a potential move above 2,100 when the New Year starts."

As stocks rallied Tuesday, bonds sold off. Third-quarter GDP growth was revised to a stunning 5 percent, and November consumer spending was up a strong 0.6 percent. But durable goods surprised to the downside, and traders said the markets were more influenced by year-end positioning than any news.

The two-year note late Tuesday was yielding 0.73 percent, the highest level since 2011. But the two-year has also been selling off on the anticipation of Fed rate hikes next year.

"Two-years tend to lead short-term rates higher when it anticipates that the Fed is going to begin to tighten," said Ward McCarthy, chief financial economist at Jefferies. "You can see it in some of the bills."

The 10-year was yielding 2.26 percent late Tuesday.

As for stocks, traders say they could continue to drift higher on year-end buying.

The key is whether oil holds the low from week, at around $54 per barrel for West Texas Intermediate futures.