The S&P 500 rose for the third consecutive day on Wednesday after housing starts hit a four-year high, but the Dow was weighed down by IBM after it posted weak revenue.
Homebuilders' shares led gains after the Commerce Department said groundbreaking on new homes jumped 15 percent in September, the quickest pace since July 2008. The surge in housing starts was viewed as evidence that the housing sector's fledgling recovery is bolstering the recovery of the broader economy.
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The PHLX Housing Index rose 2.9 percent.
International Business Machines Corp was a notable disappointment after the company said revenue fell short of expectations. The stock dropped 4.9 percent, exerting an 81-point drag on the Dow industrials. IBM has an outsized influence on the Dow, which is a price-weighted index. IBM's stock closed at $200.63.
Intel Corp , the world's largest chipmaker, lost 2.5 percent to end at $21.79 a day after giving a weak revenue outlook. The S&P technology sector index slid 0.8 percent and ranked as the only loser among the S&P 500's 10 industry sectors on Wednesday.
Although it's still early in the earnings season, the results have been a bit better than anticipated. Fourteen percent of S&P 500 companies have already reported earnings, and of those companies, 65 percent have beaten analysts' expectations, ahead of the long-term average of 62 percent.
"The results are just not that bad at all. And whenever people begin to get too far in one direction - meaning earnings are going to be terrible - generally reality is better than that, and we are seeing that now," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
According to Thomson Reuters data through Wednesday afternoon, quarterly earnings for S&P 500 components are now expected to fall 1.7 percent from a year ago, a modest improvement in expectations from a forecast for a drop of 2.3 percent earlier in the week.
Bank of America shares fell 0.2 percent to $9.44 after the second-largest U.S. bank reported that it earned just $340 million during the quarter, down 95 percent from the year-ago period. The bank also said it had provided $4.75 billion in first lien principal reductions and expected to meet total obligations within the first year of the National Mortgage Settlement.
"For the financials, the bar was set very low. They topped the bar, but we didn't get a nice tailwind from post-announcement conference calls," said Fred Dickson, chief market strategist at D.A. Davidson & Co., in Lake Oswego, Oregon.
The Dow Jones industrial average rose 5.22 points, or 0.04 percent, to 13,557 at the close. The Standard & Poor's 500 Index gained 5.99 points, or 0.41 percent, to finish at 1,460.91. The Nasdaq Composite Index advanced 2.95 points, or 0.10 percent, to close at 3,104.12.
Over the past three days, the S&P 500 has gained 2.3 percent - its best three-day advance in more than a month. The benchmark index is now just 0.33 percent off its 2012 closing high.
After the bell, shares of Ebay slipped 0.5 percent to $47.95 following the release of its results. The stock ended the regular session at $48.20, off just 0.08 percent.
Shares of American Express fell 0.6 percent to $59 after the bell after the company said third-quarter profit rose only marginally as cardmembers reined in their spending. American Express, a Dow component, closed on Wednesday at $59.37, up 1.3 percent in regular trading.
Among Wednesday's biggest losers during the regular session was Apollo Group Inc , which plunged 22.2 percent to close at an 11-year low of $21.40. Shares of Apollo, the owner of the University of Phoenix, the largest U.S. for-profit college, fell after the company forecast a weak 2013 and announced new student sign-ups fell 14 percent for the fourth quarter ended August 31.
Apollo said it would save $300 million by fiscal year 2014 by cutting jobs and shutting half of its University of Phoenix learning sites.
ASML , the world's leading chip gear maker, agreed to buy Cymer - its key supplier of a light-based technology crucial to making a new generation of much smaller and smarter chips - for $2.5 billion. Cymer's stock soared 49.4 percent to $71.45. In contrast, the U.S.-listed shares of ASML dropped 6.5 percent to $50.08.
Volume was roughly 6.3 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.51 billion.
Advancers outnumbered decliners on the NYSE by a ratio of more than 2 to 1. On the Nasdaq, five stocks rose for every three that fell.
(Reporting by Atossa Abrahamian; Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)