On the economic front, housing starts dropped to a seasonally adjusted annual rate of 861,000 in November, three percent lower than the month prior, according to the Commerce Department. Super storm Sandy likely slowed starts in the Northeast. Economists polled by Reuters expected permits to rise to an 875,000-unit pace last month.
Weekly mortgage applications fell to their lowest level since early November last week, snapping a five-week gain, according to the Mortgage Bankers Association.
Among earnings, FedEx gained after the package-delivery company posted earnings that dropped less than expected.
General Mills edged higher after the food processing company posted earnings that topped expectations and lifted its full-year profit outlook.
General Motors soared after the automaker said it will buy back 200 million of its own shares from the Treasury for $27.50 a share over the next 15 months.
Knight Capital jumped after the market maker agreed to be acquired by Getco in deal valued at nearly $1.4 billion.
In Europe, shares received an additional boost after Standard and Poor's raised Greece's credit rating by six notches on Tuesday. Greece's sovereign debt rating is now rated B-minus with a "stable" outlook, with Fitch citing action by euro zone policymakers and a reduced likelihood of the country leaving the euro zone.
A strong reading on Germany's IFO index of business sentiment also helped boost the DAX.