Stock Market Rallies on Services Data Ahead of Jobs Report

US equities closed higher Thursday as stronger-than-expected services sector data offset weak labor market indicators. The S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ) both gained ground following an afternoon rally triggered by the ISM Services PMI reading of 52.0, beating forecasts.

Earlier weakness came from disappointing employment figures. ADP reported just 54,000 private sector jobs added in August, well below estimates, while initial jobless claims ROSE to 237,000. The mixed signals suggest employers remain cautious about workforce changes despite economic expansion.

Twelve service industries reported growth in August, marking the 11th month of expansion in the past year for the sector that dominates the US economy. This resilience helped equities shake off early concerns about the labor market ahead of Friday's crucial government jobs report.