Investors also got another market milestone when the Nasdaq composite closed above the 4,000-point mark for the first time in 13 years.
The event follows two other round-number moments last week. The Standard & Poor's 500 index closed above 1,800 for the first time, and the Dow Jones industrial average finished above 16,000.
On Tuesday, homebuilder shares were among the top gainers in the broader stock market. They rose after the Commerce Department reported that approvals for housing permits rose in October at the fastest pace in five years. Those applications indicate that builders expect heightened demand.
Most of the growth in the report came from apartment permits, not homes, but investors felt the data was positive.
"It's going to translate into job creation once those permits turn into actual construction," said Quincy Krosby, market strategist with Prudential Financial.
Shares of PulteGroup, Toll Brothers and Lennar Corp. all rose 3 percent or more.
The Nasdaq closed up 23.18 points, or 0.6 percent, to 4,017.75. The last time the Nasdaq closed above the 4,000-point level was Sept. 6, 2000.
The other two major stock indexes inched higher. The Dow rose less than a point to 16,072.80. The S&P 500 index also rose less than a point, to 1,802.75.
Tiffany & Co. rose the most in the S&P 500 index. The jewelry chain jumped $7.03, or 9 percent, to $88.02, after it reported strong third-quarter earnings. The company also raised its full-year forecast.
Stock and bond markets are closed Thursday in observance of Thanksgiving. On Friday, the New York Stock Exchange and Nasdaq will close early.
Investors continue to pay close attention to any details from retailers, with the approach of Black Friday, the busy shopping day that follows Thanksgiving.
Due to the lateness of Thanksgiving, the holiday shopping season is a week shorter than usual and that could affect the amount of shopping people do. An increasing number of retailers are opening up on Thanksgiving to draw in customers.
Holiday shopping can account for as much as 40 percent of the retail industry's annual sales. The National Retail Federation, the nation's largest retail trade group, expects an increase of 3.9 percent to $602.1 billion in holiday sales this year
Already, many retailers have trimmed profit forecasts for the year, citing Americans' hesitation to spend a lot of money. Barnes & Noble shares fell 98 cents, or 6 percent, to $15.45 after the bookseller's fiscal second-quarter sales fell short of Wall Street expectations.
In other company news, men's clothing store Jos. A. Bank rose $5.69, or 11 percent, to $56.29 after rival Men's Wearhouse offered to buy the company for $1.5 billion. Men's Wearhouse rose $3.53, or 8 percent, to $50.60.
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