Stocks eked out gains for a third-consecutive session Thursday, with the 10-year note yield pushing closer to the psychological threshold of 3 percent, as investors digested a flurry of economic reports a day ahead of the government's widely-watched monthly jobs report.
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The Dow Jones Industrial Average closed 6 points higher. American Express led the gainers, while AT&T dropped. The blue-chip index had been trading in a narrow 65-point range.
The S&P 500 and the Nasdaq also closed slightly higher. The Dow and S&P 500 were poised for their best week in nearly two months. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded below 16.
Among key S&P sectors, financials gained, while interest-rate sensitive sectors such as telecoms and utilities slumped.
"On average, over the last 50 years, September has been the worst month of performance for the S&P 500 Index by far," wrote Scot Wren, senior equity analyst at Wells Fargo Advisors. "Over the next few weeks, investors will be presented with a number of issues that are going to drive stock market behavior in at least the nearer term and possibly much longer."
"The list is long," he continued. "The future of the Fed's QE program, Syria, the debt ceiling debate in Congress and German elections to name a few."
On the economic front, the pace of growth in the services sector rose to its highest since December 2005, according to the Institute for Supply Management.
The 10-year Treasury yield topped 2.97 percent following the report, hitting a fresh two-year high.
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But factory orders dropped 2.4 percent in July, according to the Commerce Department.
On the jobs front, weekly jobless claims declined to a near five-year low, according to the Labor Department. And the number of jobs in the private sector grew by 176,000 in August, up from 200,000 jobs created in the previous month, according to payroll processing giant ADP.
Meanwhile, the number of planned layoffs soared to hit its highest in nearly six months, according to a report from consultants Challenger, Gray & Christmas.
The trio of employment data came a day ahead of the Labor Department's widely-watched employment report on Friday, almost two weeks before the Fed's September policy-setting meeting. Economists polled by Reuters expect non-farm payrolls to have increased by 180,000 jobs last month, up from a gain of 162,000 the month prior.
(Read more:To taper or not: Jobs scrutinized for next Fed move)
"Uncertainty's always a negative in the short-term for the market, but the underlying trend in the economy has been good and that's a positive," said John Fox, co-manager of the FAM Value Fund.
The euro dropped to a 6-1/2 week low against the U.S. dollar as the European Central Bank kept rates on hold, with ECB President Mario Draghi repeating that the central bank is committed to keeping interest rates low for an extended period.
Meanwhile, President Obama faced growing pressure from world leaders not to launch military strikes in Syria at the Group of 20 summit on the global economy in St. Petersburg, Russia.
U.S. Senate Majority Leader Harry Reid said he is "guardedly optimistic" that the Senate will approve approve Syria use-of-force resolution by the end of next week, according to Reuters, citing a Senate aide.
The Senate's Foreign Relations Committee approved the authorization of limited military intervention in Syria, setting the stage for a contentious debate in the Senate on Sept. 9, when it is expected to vote on military action -- an issue that has spooked markets for several days.