Bond prices fall in the wake of a surprising jump in private-sector jobs.
A survey from payroll processor ADP found that private companies added 297,000 jobs last month, nearly triple the number that economists were expecting. The report is the first chance for investors to see how strong the job market was in December.
The next look comes Friday morning when the Labor Department releases its monthly report on total U.S. payrolls and the unemployment rate. Economists expect the rate will dip to 9.7 percent from 9.8 percent.
The unexpectedly high jobs survey from ADP suggests that the Labor Department report will also be strong. But economists cautioned against reading too much into the ADP figures, which also take into account weekly figures on claims for unemployment insurance, said Thomas Simons, market economist at Jefferies & Co.
"When the ADP number comes in strong, it doesn't mean all the other labor reports will come in strong," Simons said. "But it does show that the labor market is improving. You have to take all these numbers together and come up with a mosaic view."
Signs that the economy is improving weakened demand for low-risk investments. Treasury bond prices slid, pushing their yields higher. The yield on the 10-year Treasury note rose to 3.47 percent from 3.33 percent late Tuesday. The yield helps set interest rates on many kinds of loans including mortgages.
The higher rates in the Treasury market helped push the dollar up against other currencies. The dollar rose 1 percent against an index of six other currencies.
The Dow gained 31.71 points, or 0.3 percent, to 11,722.8.