U.S. stocks advanced on Tuesday on gains in the industrial and technology sectors and after U.S. existing homes sales fell less than expected in February.

Caterpillar Inc added 3.5 percent to $62.05 and was the top boost to the Dow after Wells Fargo raised its 12- to 18-month price target to a range of $73 to $75 from $63 to $65. The firm said several catalysts would support expectations for longer-term growth.

Existing home sales fell to an annual rate of 5.02 million units in February, the National Association of Realtors said. The decline was less than forecast, but highlighted the fragility of a housing recovery.

Its incremental good news that it was better than expected, but given the huge overhang of inventory, it's clear that housing will remain a troubled sector for a while, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

The Dow Jones U.S. home construction index <.DJUSHB> fell 0.5 percent, while builder KB Home dropped 3.3 percent to $16.87 after posted a wider-than-expected quarterly loss.

The Dow Jones industrial average <.DJI> jumped 50.87 points, or 0.47 percent, at 10,837.06. The Standard & Poor's 500 Index <.SPX> was up 2.88 points, or 0.25 percent, at 1,168.69. The Nasdaq Composite Index <.IXIC> rose 7.38 points, or 0.31 percent, at 2,402.69.

If the Nasdaq ends above the 2,400 mark on Tuesday, it will be its first close above that level since late August 2008.

Strength in the Nasdaq came from semiconductor stocks, with the Philadelphia semiconductor index <.SOXX> up 1.6 percent. Intel Corp gained 1.4 percent to $22.54, a day after Integrated Silicon Solution Inc raised its second-quarter revenue and earnings outlook. Integrated Silicon shot up 15 percent to $8.61.

Upward momentum has returned to the markets, so investors are gravitating to the sectors that have been working and should continue to work, Ablin said.

Healthcare stocks lagged, giving back some gains from Monday. U.S. President Barack Obama signed into law the landmark healthcare reform bill on Tuesday.

The Morgan Stanley Healthcare Payor index <.HMO> dropped 0.6 percent, and Cigna Corp fell 1.1 percent to $36.86.

U.S.-listed shares of Baidu Inc jumped 3.5 percent to $599.57 after rival Google Inc shut down its mainland China portal and began rerouting searches to its Hong Kong operation. Google shares sank 2.4 percent to $544.50.

(Editing by Jeffrey Benkoe)