The equity market will close early on Wednesday and stay shut on Thursday on account of U.S. Independence Day, keeping trading volumes thin throughout the week.

Both the ADP Employment report and weekly jobless claims data pointed to easing labor market conditions, a welcome signal ahead of Friday's closely watched non-farm payrolls report. Markets hope signs of weakness in the labor market will boost chances of the Fed cutting interest rates.

"It's quite a strong unemployment claims number, and it's fitting in with an overall trend that's probably an indication of loosening up in the jobs market. It must be quite welcoming for the Fed," said David Morrison, Trade Nation senior market analyst.

Additionally, PMI data from the Institute for Supply Management was weaker than expected, and factory orders unexpectedly slumped, strengthening the case for easing policy.

Wednesday's data prompted market participants to boost bets of a September rate cut to over 70%, as per LSEG's FedWatch.

The Fed's June meeting minutes are due later in the day.

Tesla (NASDAQ:TSLA) jumped 3.9%, trading at a near six-month high after a more than 10% gain on Tuesday following a smaller-than-expected drop in second-quarter vehicle deliveries.

The Philadelphia SE Semiconductor Index rose 0.5%, helped by gains in the U.S. listing of Taiwan Semiconductor Manufacturing and Broadcom (NASDAQ:AVGO), which rose 2.0% and 1.8%.