The ADP jobs survey data indicated a gain of 189,000 in November, sharply above estimates. Analysts believe the job numbers will help gauge direction the Federal Reserve will take at its Dec. 11 meeting, where it is widely expected the central bank will improve a 50 basis-point decrease in interest rates.

The strong job numbers surprised many analysts but could be indicative of an economy performing better than many expect and may dissuade the Fed from a major rate cut. Still, investors placed hope in the report and sent futures climbing upwards after the jobs data.

"People are pessimistic because of all the news about the subprime mess and the financials meltdown, and it may be coloring their employment forecast," Joel Rakken, chairman of Macroeconomic Advisers, told CNBC. "Employment is a lagging indicator of GDP. We just came off two very strong quarters for GDP. Our models that go from GDP to employment show strength."

In another key piece of economic data, productivity also easily beat estimates, registering a 6.3 percent annual rate against an estimate of 5.8 percent, which itself was sharply above a previous estimate of 4.9 percent. The figure represented the largest growth in productivity in four years, attributed largely to a cutback in labor hours which decreased costs.

The two strong economic reports generated some uncertainty among traders initially over worries that the Fed will be less aggressive than anticipated in monetary policy.

"We're in a situation now where good news is not enough to sustain the market," said Scott Nations, president of Fortress Trading. "Fifty basis points I think has to be off the table, and ultimately traders are going to realize for stocks that's not going to be a good thing."

Elsewhere in the market, shares of Fannie Mae

Federal National Mortgage Association FNM 35.18  UNCH  0%  NYSE

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And looking to financials, NY attorney general Andrew Cuomo subpoenaed Wall Street investment banks including Merrill Lynch

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Bear Stearns Co Inc BSC 93.61  UNCH  0%  NYSE

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The subpoenas requested information on how debt tied to high-risk mortgages was packaged and about the banks' relationship with credit rating agencies, the Journal said.

Some analysts say trials are likely to follow, with one of the most frequent arguments being that people were sold products that were not appropriate for them.

The housing market did get once piece of good news early Wednesday, with the Mortgage Bankers Association reporting that applications for home loans surged to their highest level in 2 1/2 years as interest rates continue to fall.