For every share rising, more than two fell on the New York Stock Exchange, where 667 million shares traded. Composite volume neared 3.1 billion.
The Institute of Supply Management's survey index showed manufacturing rose to 57.3 last month from 56.4 in October. Analysts had expected the index to drop to 55.0. Readings above 50 illustrate expansion.
"The national ISM didn't reflect the moth-over-month moderation seen in most regional surveys and likely is in response to continued stabilization in Europe, China, and signs of life in Japan and optimism that we will likely not see again more drama in D.C.," emailed Peter Boockvar, chief market analyst at the Lindsey Group.
A separate report showed construction spending climbed 0.8 percent in October.
The dollar gained against other global currencies and the 10-year Treasury yield rose to 2.8 percent.
"I don't think 2.8 on the 10-year is particularly threatening. There is a level that is too high, we're just not there," said Dan Greenhaus, chief global strategist at BTIG LLC, of the benchmark used in determining mortgage rates and other consumer loans.
On the New York Mercantile Exchange, gold futures fell, with the most active contract down $28.50, or 2.3 percent, to $1,221.90 an ounce.
Crude-oil futures rose $1.10, or 1.2 percent, to $93.82 a barrel.
"For the stock market the story is seasonality; December is one of the best months of the year," said Greenhaus, noting that Wall Street has gained roughly 75 percent of the time in the final month of the year.
"It's a really strong month, so to start the month, that's probably the story. Then you add in the less provable numbers like performance chasing and window dressing," Greenhaus added.