Tech Surge Leads Upswing

The services report follows the release of the ISM's manufacturing index on Wednesday, which showed an unexpected rise in manufacturing.

Elsewhere, the Labor Department said initial jobless claims rose by 10,000 to 329,000 for the week ended Dec. 30. Economists anticipated a slight increase to 320,000 claims. Additionally, factory orders rose 0.9% in November, just below estimates.

Treasuries moved higher following the economic releases. The 10-year note added 11/32 in price to yield 4.62%, and the 30-year bond rose 20/32 to yield 4.72%.

On Friday, the Labor Department will release the nonfarm payrolls data for December. Economists expect that the U.S. economy added 115,000 jobs, while the unemployment rate is expected to remain at 4.5%.

"This report will set the tone of trading for the day," said Sheldon. "Core inflation is still rising above the [Federal Reserve's] comfort zone, but the employment market has remained solid. Weekly jobless claims have continued to hold, so until some of those factors change the Fed will likely remain on hold."