(Reuters) – Wall Street extended gains in early afternoon trading on Wednesday as stronger-than-expected U.S. economic growth data outweighed concerns about escalating tensions between Washington and Pyongyang.
Investors also awaited President Donald Trump’s first speech specifically on tax reforms, a key contributor to the rally since his victory in November.
Gross domestic product increased at a 3.0 percent annual rate in the April-June period, its quickest pace in more than two years, according to Commerce Department data.
The upward revision of the second-quarter GDP growth data from the 2.6 percent pace reported last month reflected robust consumer spending as well as strong business investment.
Adding to the positive sentiment, a report from payroll processor ADP showed that U.S. private employers added 237,000 jobs in August for its biggest monthly increase in five months, above the 183,000 jobs expected by economists.
The report comes ahead of the more comprehensive government payrolls data for August on Friday.
At 12:37 p.m. ET (1637 GMT), the Dow Jones Industrial Average .DJI was up 2.76 points, or 0.01 percent, at 21,868.13 and the S&P 500 .SPX was up 6.88 points, or 0.28 percent, at 2,453.18.
The Nasdaq Composite .IXIC was up 43.35 points, or 0.69 percent, at 6,345.24.
Financials were among the leading gainers, with Goldman Sachs (GS.N) rising 1.23 percent, providing the biggest boost to the Dow, as the robust data is expected to strengthen the Federal Reserve’s case for another rate hike this year.
The data also bolstered the dollar index .DXY, which rose 0.46 percent against a basket of currencies. The index hit a 2-1/2 year low on Tuesday.
Trump is expected to mention tax reforms when he speaks later in the day at Springfield, Missouri.
“The tax reform has been one of the biggest reasons for the rally and I think it is going to go through,” said Ben Barzideh, wealth adviser at Piershale Financial Group.
“I know there is a wide disagreement on the healthcare issue. But it feels like on tax reforms, the vast majority of Republicans see eye to eye on it. I definitely expect that to happen.”
Investors are also closely tracking the ongoing tensions between the United States and North Korea after Trump dismissed any diplomatic negotiations with North Korea, saying “talking is not the answer,” a day after Pyongyang fired a ballistic missile over Japan.
However, his defense chief, Jim Mattis, swiftly asserted that the United States still has diplomatic options.
Seven of the 11 major S&P sectors were higher, with the materials index’s .SPLRCM 0.58 percent rise leading the gainers.
Among stocks, H&R Block (HRB.N) fell 8.11 percent, the top percentage loser on the S&P, after the tax preparation service provider reported a bigger-than-expected loss.
Aerovironment (AVAV.O) rose 16.32 percent after the drone maker reported a smaller-than-expected loss and revenue that beat estimate.
Analog Devices (ADI.O) was up 3.51 percent after the chipmaker’s quarterly earnings and forecast exceeded expectations.
Advancing issues outnumbered decliners on the NYSE by 1,631 to 1,156. On the Nasdaq, 1,778 issues rose and 1,029 fell.
Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila