US growth revision drives Wall Street higher

[NEW YORK] US stocks rose on Wednesday after stronger-than-expected US economic growth outweighed concerns about escalating tensions between the United States and North Korea and uncertainty in the aftermath of Hurricane Harvey.

Gross domestic product was revised higher to show a 3 per cent annual growth rate in the second quarter, due partly to robust consumer spending as well as strong business investment.

Adding to the positive sentiment, US private-sector employers beat economists' expectations as they hired 237,000 workers in August, marking the biggest monthly increase in five months.

"I have doubts how sustainable the macro economy is, but perceived fundamentals are still okay. GDP confirmed that," said John Velis, macro strategist at State Street Global Markets in Boston.

"You can come up with plenty excuses to remain (invested) in the market."

President Donald Trump said he wants to see the US corporate tax rate drop to 15 per cent but the White House offered no new tax plan, leaving the proposal in the hands of Congress.

Tax reform was one of Mr Trump's main talking points during his campaign and expectations for its passage have been a main driver of stock gains since he won the presidency.

The Dow Jones Industrial Average rose 27.06 points, or 0.12 per cent, to end at 21,892.43, the S&P 500 gained 11.29 points, or 0.46 per cent, to 2,457.59 and the Nasdaq Composite added 66.42 points, or 1.05 per cent, to 6,368.31.

The Nasdaq closed within one per cent of its record closing high set in late July.

Tensions between the United States and North Korea seemed to escalate after Trump dismissed any diplomatic negotiations via a tweet, saying "talking is not the answer," a day after Pyongyang fired a ballistic missile that flew over Japan.

However, defense secretary Jim Mattis later said the United States still has diplomatic options.

H&R Block fell 8.3 per cent to $26.81 after the tax preparation service provider reported a bigger-than-expected loss.

Aerovironment rose 18.2 per cent to US$46.52 after the drone maker reported a smaller-than-expected loss and revenue that beat estimates.

Analog Devices closed up 5.2 per cent at US$83.72 after the chipmaker's quarterly earnings and forecast exceeded expectations.

Advancing issues outnumbered declining ones on the NYSE by a 1.66-to-one ratio; on Nasdaq, a 1.69-to-one ratio favoured advancers.

Some 376 US-traded issues posted new 52-week highs and there were 245 new lows. Highs were well below their average over the past year while lows were slightly above theirs.

About 5.12 billion shares changed hands in US exchanges, below the 5.84 billion daily average over the last 20 sessions.

REUTERS