NEW YORK (REUTERS) - Wall Street mostly edged higher on Wednesday, with the Dow hitting another record, helped by a private payroll survey that bodes well for the monthly jobs report due at the week's end.

Improved labour market data from the private sector sparked the positive tone and boosted confidence for the United States (US) government's payroll report on Friday.

The data from payrolls processor ADP followed similarly strong reads on housing and the services sector, reports that have contributed to lifting the Dow to historic levels and pushing up the S&P 500 to just 1.5 per cent below its own record close.

Continued support from the Federal Reserve and equity valuations that are considered attractive compared with other asset classes have also pushed shares higher, and while some continue to call for a pullback at recent levels, those factors staying in place could keep the positive momentum intact.

"When you reach a record high, it triggers introspection about whether we're overvalued, but I don't expect a pullback because the reasons we've climbed are still in place," said Mr David Joy, chief market strategist at Ameriprise Financial in Boston. "The market has the opportunity to move higher until there's evidence those factors will die out."

Energy and material shares led the advance.

Both sectors are closely tied to growth expectations. Peabody Energy rose 3.5 per cent to $21.53, while Chevron Corp gained 0.5 percent to $118.47. Newmont Mining rose 3.7 per cent to $40.01 while US Steel Corp added 3.9 percent to $20.76.

Freeport-McMoRan Copper & Gold Inc was the S&P 500's top percentage gainer, up 4.1 per cent at $32.84.

The S&P 500 index is trading at 13.6 times estimated 12-month earnings, compared with around 14.9 times in October 2007 when the index hit its intraday high, according to Thomson Reuters data. This suggests that stocks are still about 9 per cent cheaper than they were at the 2007 peak.

Relative to junk bonds, the earnings yield on the S&P 500 - the inverse of the P/E ratio and used for valuation comparisons with bonds - is around 7.5 percent - above the yield to maturity on junk bonds, which is around 6.5 per cent, data showed, indicating that stocks have a better value than the riskiest corporate bonds.

The Dow Jones industrial average rose 42.47 points, or 0.30 per cent, to 14,296.24, another record closing high. The Standard & Poor's 500 Index edged up 1.67 points, or 0.11 per cent, to 1,541.46. The Nasdaq Composite Index slipped 1.77 points, or 0.05 per cent, to close at 3,222.36.

Shortly after Wednesday's trading began, the Dow punched through the previous session's intraday record, trading as high as 14,320.65.

On Tuesday, the Dow ended at 14,253.77, breaking through October 2007's record close of 14,164.53.

For the year, the Dow is up 9.1 per cent.

Tech shares weighed on the Nasdaq, with Microsoft Corp down 0.9 per cent at $28.09 after the European Union fined the company US$731 million (S$911 million) for failing to offer users a choice of web browser.

Google Inc dipped 0.9 per cent to $831.38 after hitting an all-time intraday high earlier in the session.

The positive catalyst for Wednesday's advance came from signs of improvement on the jobs front. The slowly healing labour market has been one of the weaker spots of the recovery, but data on Wednesday showed private-sector hiring was surprisingly strong in February as companies added 198,000 employees.

It was an early look at the labour market two days ahead of the US government's closely watched non-farm payrolls report on Friday, which is expected to show the economy created 160,000 jobs last month while the unemployment rate held at 7.9 per cent.

"If payrolls come in under 150,000, that could knock the market off stride, but if we got anything north of 175,000, that would give another boost to the market in the short term," said Joy, who helps oversee US$675 billion.

The larger S&P 1500 has already reached record highs, thanks to help from smaller-cap companies.

The Russell 3000 Index, which measures the performance of the 3,000 largest US companies, also hit a record intraday high earlier in the session.

The CBOE Volatility Index rose 0.4 per cent, after previously gaining as much as 2 per cent on the day as investors snapped up protection on concerns that the rally may run out of steam.

Staples shares tumbled 7.2 per cent to $12.34 after the largest US office supply chain reported lower-than-expected quarterly revenue and forecast weak earnings for the full year.

Roughly 6.3 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.

About 53 per cent of stocks traded on both the New York Stock Exchange and Nasdaq closed higher on Wednesday.