The S&P 500 was on track for a record close and the Dow Jones Industrial Average once again moved within shouting distance of 17,000, as a manufacturing index showed the strongest level of new orders since the end of last year.
The markets kicked off the second half of 2014 even as the headline numbers on the ISM manufacturing data and Markit's PMI index narrowly missed expectations.
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The S&P 500 (SPX) gained 9 points, or 0.5%, to 1,969.26, scaling an intraday record high.
The Dow Jones Industrial Average (DJI) shot up 108 points, or 0.6%, at 16,934.41. The Nasdaq Composite (RIXF) rose 37 points, or 0.8%, to 4,441.91.
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U.S. manufacturing companies expanded at a slightly slower but still rapid pace in June, as new orders rose to the highest level since the end of 2013, a survey of executives found.
Markit's final reading of U.S. manufacturing purchasing managers index for June came in at 57.3, slightly down from the 57.5 flash reading.
Outlays for U.S. construction projects rose 0.1% in May to a seasonally adjusted annual rate of $956.1 billion, the U.S. Commerce Department reported Tuesday. Economists polled by MarketWatch had expected a 0.7% increase.
Ahead of the U.S. reports, two separate manufacturing PMIs from China showed improvement in June, but manufacturing activity in the euro zone slowed.
Investors will also pay attention to June car sales figures to assess the health of U.S. consumers.
General Motors Co. (GM.XX) shares were up 1.2% as the car maker reported its U.S. car and light truck sales rose 1% in June to 267,461 vehicles.
Ford Motor Co. (F) shares dropped 0.4% after the company said U.S. vehicle sales fell 6% to 222,064 in June.
Shares of Netflix Inc.(NFLX) rose 3.6% after Goldman Sachs equity analysts upgraded the stock to a buy, from neutral.
Shares of Urban Outfitters Inc. (URBN) were down 2.7% after analysts at Wedbush downgraded the stock to neutral from outperform, citing risks of a slowdown in the retailer's Anthropologie unit.
In other markets, Japan's Nikkei Average rose 1.1% and Europe's Stoxx 600 was higher, with BNP Paribas SA gaining after the French bank agreed to pay a record $8.8 billion settlement to U.S. authorities for violating U.S. sanctions.
U.S. benchmark crude-oil futures (CLQ4) rose 31 cents to $105.68 a barrel and gold futures (GCQ4)climbed $4.90 to $1,326.90 an ounce.