Stocks rose broadly on Tuesday as investors scooped up healthcare shares on bets that a potential Republican victory in Massachusetts' Senate race could stall U.S. President Barack Obama's reforms and remove a threat to profits in the sector.

The S&P Healthcare Index <.GSPA> climbed nearly 2 percent, including drug company Eli Lilly , which rose 5 percent.

Massachusetts voters were deciding a tight race on Tuesday to replace the late Edward Kennedy, a Democrat. The loss of one seat in the Senate could hurt the Democrats' ability to proceed to a vote on the planned healthcare overhaul that seemed to be in the final stages of the legislative process.

The action in Massachusetts is a revolt on tax and spend, said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston said. It's a potential for gridlock much like we had in the Clinton years. I think there's certainly a desire to return to a more balanced political landscape.

The Dow Jones industrial average <.DJI> shot up 106.71 points, or 1.01 percent, at 10,716.36. The Standard & Poor's 500 Index <.SPX> gained 12.16 points, or 1.07 percent, at 1,148.19. The Nasdaq Composite Index <.IXIC> rose 29.80 points, or 1.30 percent, at 2,317.79.

Health insurers Humana Inc rose 3.6 percent to $50.30 and Aetna Inc gained nearly 4 percent to $32.59. Merck & Co , a Dow component, gained 2.6 percent to $40.50.

All 10 S&P 500 industry sectors traded in positive territory, and strong momentum could carry the Dow and the S&P 500 to fresh 15-month closing highs.

The Dow also received a boost from McDonald's Corp after Credit Suisse upgraded the fast food giant, saying its international businesses were a potential driver of earnings.

McDonald's stock gained 2.3 percent to $63.74 and was the Dow's second top percentage gainer behind 3M Co , up 2 percent to $84.94.

Citigroup Inc was up 3 percent at $3.53 after it reported a fourth-quarter loss that narrowed from the previous year. The loss came on charges linked to repaying government funds, following JPMorgan Chase & Co's disappointing results on Friday.

Kraft Foods Inc was the biggest drag on the Dow, falling 1.1 percent to $29.25 after it agreed to a revised cash-and-stock deal to buy Cadbury for about $19.6 billion.

In other acquisition news, Tyco International agreed to buy Broadview Security, which operates as Brink's Home Security Holdings Inc , for $1.9 billion. Brink's shares surged almost 31.6 percent to $41.36.

Shares of large-cap technology companies, including Apple Inc , boosted the Nasdaq before quarterly earnings from International Business Machines Corp . The tech bellwether is expected to report results after the close.

Apple was up 4.2 percent at $214.51 on Nasdaq, while IBM climbed 1.02 percent to $133.12 on the New York Stock Exchange.

The PHLX Semiconductor Index <.SOXX> advanced 1.7 percent.

Parker Hannifin Corp

jumped 4.9 percent to $61.45 after the maker of motion control technology reported a smaller-than-expected drop in quarterly profit and raised its full-year earnings forecast.

(Editing by Kenneth Barry)