By Wallace Witkowski and Mark DeCambre, MarketWatch

Best Buy shares log biggest daily rise in 15 years

U.S. stocks closed in positive territory on Tuesday, but off the best levels of the session, after upbeat data on U.S. new-home sales and a stronger-than-expected gauge of European private-sector activity.

The Nasdaq Composite briefly hit an all-time intraday high, while the S&P 500 flirted with its own intraday record. Both the S&P 500 and Nasdaq had traded at levels that would have given them new closing highs Tuesday, but fell short by the close.

The Dow Jones Industrial Average ended the day with a gain of 17.88 points, or 0.1%, at 18,547.30, underpinned by a 1.6% rise in shares of Nike Inc.(NKE) and a 1.1% gain by Cisco Systems Inc.(CSCO)

The S&P 500 index finished up 4.26 points, or 0.2%, at 2,186.90. Eight out of 10 S&P 500 sectors posted gains, led by a 0.8% climb in materials shares. The large-cap benchmark came within shouting distance of its intraday trading high of 2,193.81, hitting 2,193.46 in late-morning action, and fell short of its closing record of 2,190.15, set on Aug. 15.

The Nasdaq Composite Index closed up 15.47 points, or 0.3%, at 5,260.08--touching an intraday record of 5,275.74, before pulling back to close just shy of its all-time closing high of 5,262.02, set on Aug. 15.

U.S. new-home sales surged to the highest level in nearly eight years in July, rising 12.4% to a seasonally adjusted annual rate of 654,000, the Commerce Department said Tuesday. (http://www.marketwatch.com/story/new-home-sales-roar-to-an-8-year-high-of-654000-in-july-2016-08-23)However a weaker-than-expected gauge of manufacturing may be tempering gains.

That big surprise advance in home sales is exactly the sort of surprise the market wants right now, especially following last week's less-than-stellar results from retailers, said Karyn Cavanaugh, senior market strategist at Voya Financial.

"It's a boost to confidence that housing is picking up the slack where business investment has failed considerably, because with housing being a consumer's number one asset, you figure they need to furnish it, landscape it, go down to the home improvement store--the magnitude of all that shows that confidence is good," Cavanaugh said.

The new-home sales data and a better-than-expected second-quarter report from Toll Brothers Inc.(TOL), pointed to a U.S. economy that continues to offer signs of strength amid ultralow interest rates.

Signs that the European economy was holding up in the weeks following the U.K.'s referendum on June 23 to secede from the European Union contributed to positive momentum for stocks, especially since several U.S. companies have identified the so-called Brexit as a potential headwind.

IHS Markit said its preliminary, or flash, composite purchasing managers index rose to 53.3. Economists surveyed by The Wall Street Journal, on average, expected a reading of 53.0. A figure above 50 indicates an expansion.

"I think the resilience being shown" by Europe's preliminary PMIs, "remains a positive for U.S. markets," said Wouter Sturkenboom, senior investment strategist at Russell Investments.

Investors also were playing a waiting game ahead of a retreat of Federal Reserve members and economists at Jackson Hole, Wyo., on Friday, where Chairwoman Janet Yellen will be watched for hints about U.S. monetary policy.

Voya's Cavanaugh is skeptical of prospects for a rate hike, even by December.

"With all the caution that the Fed has exhibited, the Fed wants to make doubly sure that all data points are good," Cavanaugh said. "They have to make sure that the great jobs data (http://www.marketwatch.com/story/solid-across-the-board-reactions-to-july-jobs-report-2016-08-05)is repeated in September."

Read:Why economists aren't willing to give hawks like Fischer the benefit of doubt (http://www.marketwatch.com/story/economists-not-willing-to-give-hawks-like-fischer-benefit-of-doubt-2016-08-22)

Even so, the probability of a rate hike this year climbed somewhat. The market is pricing in a 24% probability of a rate increase in September, up from a previous 18%; and a 54% chance of it happening in December, up from a previous 52%, according to CME's Fed Watch Too (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html)l.

Read:Yellen to say 'ready' for another rate hike in Jackson Hole (http://www.marketwatch.com/story/yellen-to-say-ready-for-another-rate-hike-in-jackson-hole-2016-08-19)

The dollar was mostly flat against (http://www.marketwatch.com/story/dollar-slips-as-investors-remain-cautious-ahead-of-jackson-hole-2016-08-23) all major currencies on Tuesday as investors held off making bets. The ICE dollar index was little-changed at 94.54.

Economic news: In other economic data, a reading of manufacturing sentiment was softer in August (http://www.marketwatch.com/story/markit-flash-us-factory-pmi-softens-in-august-2016-08-23) after hitting its highest level in nine months in July. The flash manufacturing purchasing managers index from Markit fell to a reading of 52.1 this month from 52.9 in July.

See:

Oil bounce:Crude-oil futures reversed course (http://www.marketwatch.com/story/oil-prices-slide-further-as-iraq-prepares-to-ramp-up-exports-2016-08-23)to turn sharply higher after a report suggested that Iran might be willing to work with other major crude producers to cap output. West Texas Intermediate settled up 1.5% at $48.10 a barrel on the New York Mercantile Exchange after tapping lows under $47.

Movers and shakers: Shares of Best Buy Co. Inc.(BBY) surged to close up nearly 20% after the consumer-electronics retailer posted earnings ahead of forecasts (http://www.marketwatch.com/story/best-buys-stock-soars-toward-10-month-high-after-profit-sales-beat-expectations-2016-08-23). Shares rallied for their biggest daily rise in 15 years, when they jumped 23% on Jan. 3, 2001, according to FactSet data.

Toll Brothers jumped 8.8% as the home builder reported a 58% rise in third-quarter profit (http://www.marketwatch.com/story/toll-brothers-profit-matches-views-sales-top-2016-08-23).

Zoe's Kitchen Inc.(ZOES) tumbled 17% after the fast-casual restaurant chain late Monday cut its guidance for the fiscal year (http://www.marketwatch.com/story/zoes-kitchen-shares-fall-as-guidance-is-cut-2016-08-22-184854647).

J.M Smucker Co.(SJM) shares dropped 8.1% after the food company topped Wall Street earnings targets but missed on sales (http://www.marketwatch.com/story/smucker-beats-profit-expectations-but-sales-miss-2016-08-23).

Mylan NV(MYL) shares slid 4.8% on building controversy over the drugmaker's pricing of emergency allergy treatment EpiPen (http://www.marketwatch.com/story/mylans-epipen-price-increases-are-valeant-like-in-size-shkreli-like-in-approach-2016-07-20).

Wells Fargo & Co.(WFC) slipped 0.5% after the Consumer Financial Protection Bureau said Monday it fined the bank $3.6 million (http://www.marketwatch.com/story/cfpb-fines-wells-fargo-36-million-for-deceptive-student-loan-practices-2016-08-22) for illegal student loan servicing. Shares were down 0.3%.

Mobileye NV(MBLY) rose 6.7% and Delphi Automotive PLC(DLPH) gained 4.3% after news the two are joining forces to develop self-driving technology (http://www.marketwatch.com/story/delphi-mobileye-team-up-to-develop-self-driving-tech-for-car-makers-2016-08-23) for car makers.

Other markets: Asian shares closed mostly higher (http://www.marketwatch.com/story/little-movement-from-asian-markets-ahead-of-fed-meeting-2016-08-22), while European stocks rose across the board (http://www.marketwatch.com/story/european-stocks-step-higher-as-pmi-data-rolls-in-2016-08-23) after PMI data showed the eurozone recovery picking up pace (http://www.marketwatch.com/story/eurozone-economic-recovery-picking-up-despite-brexit-pmis-show-2016-08-23).

Gold futures (http://www.marketwatch.com/story/gold-silver-tip-cautiously-higher-as-dollar-softens-2016-08-23) settled up 0.2% at $1,346.10 an ounce with the dollar trading flat.

--Sara Sjolin in London contributed to this article.

(END) Dow Jones Newswires

August 23, 2016 16:28 ET (20:28 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.