The Nasdaq hit a high of 5,000.33 before retreating, the first time above that level since March 27, 2000, at the height of the dot.com bubble.
"Five thousand on the Nasdaq, it's been a long time coming," said Peter Kenny, chief market strategist at Clearpool Group in New York.
"Now that data point, or psychological barrier, has been breached, investors are going to look at the likelihood we will continue to see the move higher in the Nasdaq and the degree to which the Nasdaq will outperform the broader market."
U.S. consumer spending fell for a second month in January, with lower gasoline prices dampening inflation pressure while personal income fell just short of expectations, showing a rise of 0.3 percent.
Separate gauges of manufacturing were conflicting, as financial data firm Markit's final U.S. Manufacturing Purchasing Managers' Index hit a four-month high while a reading from the Institute for Supply Management fell to its lowest in 13 months.
Construction spending also softened, falling at a 1.1 percent annual rate, below expectations calling for a 0.3 percent increase in January.
The Dow Jones industrial average rose 110.97 points, or 0.61 percent, to 18,243.67, the S&P 500 gained 7.1 points, or 0.34 percent, to 2,111.6 and the Nasdaq Composite added 29.90 points, or 0.6 percent, to 4,993.43.
Chip maker NXP Semiconductors NV has agreed to buy smaller peer Freescale Semiconductor Ltd and merge operations in a deal valuing the combined company at over $40 billion. NXP shares jumped 16.5 percent to $98.90 while Freescale advanced 10.9 percent to $40.05.
Lumber Liquidators plunged 23.5 percent to $39.67 after a report by television news program "60 Minutes" said the retailer of hardwood flooring in North America sold flooring with higher levels of formaldehyde than permitted under California's health and safety standards.
Boston Scientific Corp said it will acquire Endo International Plc's American Medical Systems urology portfolio for up to $1.65 billion. Boston Scientific rose 1.6 percent while Endo gained 2.2 percent to $87.50.
Cardinal Health said it would buy Johnson & Johnson's Cordis vascular technology unit for $1.9 billion and the acquisition would boost 2017 earnings by 20 cents per share. Cardinal Health gained 1.4 percent to $89.26 and JNJ added 0.6 percent to $103.15.
Advancing issues outnumbered declining ones on the NYSE by 1,747 to 1,198, for a 1.46-to-1 ratio; on the Nasdaq, 1,750 issues rose and 847 fell, for a 2.07-to-1 ratio favoring advancers.
The S&P 500 posted 42 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 109 new highs and 18 new lows. — Reuters
