U.S. stocks rose, led by gains in energy shares to extend a three-week rally before Friday's payrolls report that may provide a clearer picture on the strength of the economy and path for interest rates.

Energy producers in the Standard & Poor's 500 Index erased 2016 declines as a rally in the group helped equities shake off earlier weakness for a second day. Banks also gained momentum in the afternoon, rising for the fifth time in six days. Health-care and technology shares struggled, with Microsoft Corp. losing 1.1 percent. Kroger Co. sank 7 percent after the grocer forecast slower growth this year.

The S&P 500 rose 0.4 percent to 1,993.39 at 4 p.m. in New York, wiping out a drop of as much as 0.5 percent to hold at an eight-week high.

Investors are watching economic reports as central-bank meetings approach, with the government's monthly nonfarm payroll figures looming large tomorrow. Data today showed growth in service industries slowed for a fourth straight month in February. A separate gauge showed factory orders in January rose less than expected, while the number of claims for unemployment benefits remained consistent with a steady labor market.

With improvement in recent data, coupled with the rebound in equities, traders have lifted their bets on higher borrowing costs this year. While they're pricing in a less than one-in-10 chance of a rate increase at the end of the Federal Reserve's next meeting on March 16, the probability of a boost by June is 36 percent, up from 24 percent a week ago. Odds for a December move stand at nearly 64 percent compared to 36 percent last week.

As the earnings season draws to a close, about three-quarters of S&P 500 companies have beaten profit projections, while less than half have topped sales forecasts. Analysts estimate earnings at S&P 500 companies fell 3.7 percent in the fourth quarter, compared with Jan. 15 predictions for a 7 percent slump.