At its session high, the Dow was within 15 points of the milestone 17,000 level, and the S&P 500 is less than 1.5 percent away from 2,000. Both round-number levels could serve as psychological barriers as the market trades at record highs.
U.S. private employers hired 281,000 workers in June, marking the biggest monthly increase since November 2012, well above market expectations for 200,000, data from payrolls processor ADP showed. The number bodes well for the government's June payroll data due Thursday.
"We're looking for a bit of a snapback in the economy and this is certainly data that points in that direction," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
"The pattern of better economic data continues, that means we've got an improving economy which should lead to higher earnings and be constructive for stocks."
A fall in demand for military equipment spurred a drop in new orders for U.S. factory goods in May, but signs of a healthy appetite for investment in the private sector pointed to broader strength in the economy.
The S&P utilities sector was the worst performer, down 1.4 percent as traders bet the data was a predictor of a stronger economy and higher interest rates. Utilities are a market favorite in low interest rates environment as a dividend play.
The Dow Jones industrial average rose 8.38 points, or 0.05 percent, to 16,964.45, the S&P 500 gained 0.55 points, or 0.03 percent, to 1,973.87 and the Nasdaq Composite added 3.89 points, or 0.09 percent, to 4,462.54.
Rackspace Hosting shares jumped 5.5 percent to $35.60 after TechCrunch reported the cloud service provider may take itself private and was in talks with a private equity firm to fund the deal.
Shutterfly shares jumped 13.8 percent to $49.52 after Bloomberg reported that the company was working with boutique investment bank Qatalyst Partners to find buyers for itself.
GoPro shares fell 10.7 percent to $43.59 after closing at $48.80 Tuesday, which was more than double their IPO price of $24 set last week. Sungard's Astec Analytics said the cost to borrow GoPro shares, a proxy for short interest, was "one of the highest on our system" and utilization is near 100 percent.
JPMorgan Chase shares were in focus after Chief Executive Officer Jamie Dimon said he had been diagnosed with early stage throat cancer but would remain actively involved in the largest U.S. bank's business while in treatment. Shares were down 1 percent at $57.02.
Adding to a recent string of transactions that has lifted stocks in the healthcare sector, Roche said it would pay up to $1.725 billion to buy Seragon Pharmaceuticals, a privately-held U.S. biotech company that researches breast cancer treatments.
(Editing by Bernadette Baum)
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