US close: Stocks end higher after better-than-expected US GDP

US stocks finished in positive territory on Tuesday as economic growth data came in better than expected.

The Dow rose 0.96%, the Nasdaq increased 0.65% and the S&P 500 gained 0.88%.

The final estimate of third quarter US gross domestic product was revised to an annualised 2% from a previous estimate of 2.1% but it exceeded analysts' estimates of 1.9%.

"Altogether, the third estimate of third quarter GDP does little to change the picture of solid domestic activity offset by weakness abroad, as final sales to domestic purchasers (GDP less trade and inventories) rose 2.9% in the quarter," said Barclays Research analysts.

The core personal consumption expenditure index unexpectedly increased to 1.4% quarter-on-quarter in the third quarter from a prior estimate of 1.3%. PCE is a measure of GDP and the Federal Reserve's preferred measure of inflation. The US central bank, which this month decided to increase interest rates for the first time in nearly a decade, is targeting 2% inflation.

On the downside of data, the National Association of Realtors revealed existing US homes fell sharply in November, to their lowest pace in 19 months. The NAR figures suggest existing home sales dropped 10.5% to an annual rate of 4.76m from a downwardly-revised 5.32m in October and compared with consensus estimates for an increase to 5.35m.

Meanwhile, oil rebounded with West Texas Intermediate up 1.05% to $36.16 per barrel at 0926 GMT.

On the corporate front, Google and Ford were higher amid expectations that the two companies will be teaming up on a self-driving project.

Wearable action camera company GoPro gained after it said a new GoPro Channel has become available on PlayStation gaming systems.

Fashion retailer Abercrombie & Fitch rallied after it appointed Fran Horowitz to the newly-created role of chief merchandising officer.

Chipotle was in the red after as JPMorgan downgraded the stock to ‘neutral’ from ‘overweight’ following the latest E.coli outbreak at some of its outlets.

The US dollar was down 0.36% against the euro, up 0.42% against the pound and down 0.10% against the yen.