By Jonathan Cheng 

Encouraging data from the housing sector pushed investors broadly into stocks for another day, though a disappointing earnings report from International Business Machines Corp. (IBM) weighed heavily on the blue chips.

The Dow Jones Industrial Average pared early declines to lose eight points, or 0.1%, at 13544. The modest decline came in spite of IBM, whose large presence on the price-weighted index accounted for about 75 points on the downside.

The Standard & Poor's 500-stock index tacked on five points, or 0.4%, to 1460, while the technology-heavy Nasdaq Composite rose eight points, or 0.3%, to 3109.

Intel Corp. (INTC) and IBM both issued disappointing earnings reports after the closing bell on Tuesday. IBM slumped 4.7% because the technology company's third-quarter revenue fell short of analysts' estimates, due to weakness in hardware sales.

Intel dropped 2.8% after missing forecasts for earnings and revenue, hurt by declining sales of personal computers. The semiconductor maker provided a somewhat downbeat outlook on revenue and gross margin percentages for the current quarter.

As a result, technology was the weakest among the 10 S&P 500 sectors. Elsewhere, energy, financials and telecommunications stocks led the gains. Home Depot Inc. (HD) rose 1.8% and Alcoa Inc. (AA) advanced 1.8%, leading the Dow components.

Helping to limit the downside Wednesday was news underscoring the recent strength of the U.S. housing market. Construction of homes surged in September to the highest level in more than four years, rising 15.0% from August to a seasonally adjusted annual rate of 872,000, well above expectations for a rate of 768,000.

Meantime, new building permits, an indication of future construction, rose by 11.6% to an annualized level of 894,000 in September, above estimates for a rate of 810,000.

The strong data helped boost already buoyant housing stocks. PulteGroup Inc. (PHM) and Hovnanian Enterprises Inc. (HOV) soared 7% and 5.1%, respectively and are now up 181% and 185% this year. D.R. Horton Inc. (DHI) rose 5.9% and Lennar Corp. (LEN) gained 3.8%, while regional banks Hudson City Bancorp (HCBK)and M&T Bank Corp. (MTB) were also strong.

M&T Bank, which topped earnings and revenue expectations amid strong mortgage growth, rallied 5.1% to trade above $100 a share for the first time in five years.

"It's surprising to see that the market is up--it shows you how quickly the market can change. People thought the S&P 500 could fall to 1400, and now we're back up testing the all-time highs," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Genuity.

Mr. Rovelli also pointed to the jump in Treasury yields, which he said would push people further into stocks. The drop in Treasury prices pushed the yield on the benchmark 10-year note up to 1.79%.

"There's no place to put your money, and once the 10-year yield goes above 1.90%, even more money will flood into stocks," Mr. Rovelli said. "As long as we don't get the fiscal cliff, I wouldn't be surprised if we don't just go higher between now and the end of the year."

The U.S. stock moves came on the heels of strength in overseas markets. In Europe, Spanish stocks surged after Moody's Investors Service affirmed Spain's government-bond rating at Baa3, which is one notch above junk status.

The Stoxx Europe 600 rose 0.5%, while Spain's IBEX-35 stock index surged 2.4% to a three-week high. In addition, the yield on Spain's benchmark 10-year government bond hit the lowest level since early April, trading recently at 5.483%.

Asian markets were also broadly higher. Japan led the way after Prime Minister Yoshihiko Noda told his cabinet to draft an economic-stimulus package. Japan's Nikkei Stock Average ran up 1.2%, China's Shanghai Composite added 0.3% and Australia's S&P/ASX 200 gained 0.8% to close at a 15-month high.

Crude-oil futures traded roughly flat at about $92 a barrel after a weekly report on oil inventories showed higher-than-expected stockpiles of crude oil. Gold futures edged up to about $1,750 an ounce. The dollar slipped against the euro and the yen.

In corporate headlines, Bank of America gained 0.7% after the banking giant said it broke even on a per-share basis in the third quarter, compared with expectations of a slight loss. That helped offset a shortfall in revenue.

Cymer Inc. (CYMI) soared 54% after the maker of semiconductor equipment agreed to be acquired by Dutch chip maker ASML Holding NV (ASML.AE, ASML) in a cash-and-stock deal currently valued at 1.95 billion euros ($2.56 billion). U.S.-listed shares of ASML fell 5.1%.

Knight Capital Group Inc. (KCG)slipped 0.4% after the company reported third-quarter revenue figures that were less poor than analysts had expected. Still, the net loss was wider than anticipated due to writedowns of trading losses.

Halliburton Co. (HAL) declined 1.2% after the oil-services company reported third-quarter earnings that were down from year-earlier levels, citing reduced activity by some customers.

Apollo Group Inc. (APOL) slid 19%, making it the worst performer on the S&P 500, after the for-profit education company's quarterly revenue numbers fell short of expectations. Its outlook on revenue in fiscal 2013 was also below projections.

CSX Corp. (CSX) declined 1.8% after the railroad company reported third-quarter revenue that fell shy of forecasts. Earnings were higher than forecast, and the company affirmed its full-year earnings outlook.

Fortinet Inc. (FTNT) slumped 19% after the network security company reported its first year-to-year profit decline in more than a year.

Cree Inc. (CREE) jumped 12% after the maker of energy-efficient lights boosted quarterly profits by 26%, on the high end of estimates, on improved revenue and margins.

Dean Foods Co. (DF) soared 14% to lead the S&P 500 advancers after its WhiteWave Foods unit said it expects its initial public offering of 20 million shares will be priced at between $14 and $16 a share.

  Write to Jonathan Cheng at jonathan.cheng@wsj.com 
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