Investors were encouraged by President Barack Obama’s call to overhaul taxes on businesses and a jump in new home sales in December. The gains were held back by weak profit forecasts from Boeing Co., Xerox Corp. and other big names.

Obama said in his State of the Union address late Tuesday that he wanted to close corporate tax loopholes and use the additional revenue to lower tax rates on businesses for the first time in 25 years.

That change would be popular with business leaders from both political parties. The U.S. has some of the highest corporate tax rates in the industrialized world.

"If he can take steps to simplify the tax codes, be it for individuals or corporations, I think it would be a lot easier to do business," said Jack Ablin, chief investment officer at Harris Private Bank.

The Dow Jones industrial average rose 7, or 0.1 percent, to 11,984 in afternoon trading. It went as high as 12,020 earlier. The last time the Dow traded above or closed above 12,000 was in June 2008.

Boeing was the worst performer of the 30 stocks in the Dow average. Boeing fell 3.3 percent after saying its 2011 profit would be hurt by delays to its new 787 aircraft and higher pension expenses.

Xerox fell 8 percent. The company issued a weak earnings forecast and said its longtime chief financial officer, Lawrence A. Zimmerman, was retiring.

Eastman Kodak Co. fell 8.2 percent. The company’s income fell 95 percent on weaker revenue from its camera business and lower royalties from digital imaging.

The Standard & Poor’s 500 index rose 7, or 0.6 percent, to 1,298. The last time the S&P index closed above 1,300 was Aug. 28, 2008.

The Nasdaq composite index rose 22, or 0.8 percent, to 2,742.

The Commerce Department reported that new home purchases rose 17.5 percent in December compared with November. Despite the strong one-month jump, new home sales for all of 2010 fell to the lowest level on records going back 47 years.

Bond prices fell, sending their yields higher. The yield on the 10-year Treasury note rose to 3.40 percent from 3.34 percent late Tuesday.

Later in the day, the Federal Reserve will release a statement from its latest policy meeting. It’s not expected to announce any changes to interest rates or the Fed’s $600 billion bond-buying program.