S&P, Dow flat as strong data helps offset Trump's N.Korea comments

Gross domestic product increased at a 3.0 per cent rate in the April-June period, the Commerce Department said in its second estimate.
Gross domestic product increased at a 3.0 per cent rate in the April-June period, the Commerce Department said in its second estimate.PHOTO: REUTERS

NEW YORK (REUTERS) - The S&P and the Dow opened little changed on Wednesday (Aug 30) as investors focused on data that showed stronger-than-expected US economic growth, helping offset worries over President Donald Trump's latest tweet on North Korea.

Gross domestic product increased at a 3.0 per cent rate in the April-June period, the Commerce Department said in its second estimate.

The upward revision in the second-quarter data from the 2.6 per cent 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 US 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 strong data could strengthen the Federal Reserve's case for another rate hike this year.

Chances of a rate hike rose to 37 per cent from 32 per cent after the data, according to CME Group's FedWatch tool. The ADP report comes ahead of the more comprehensive government payrolls data for August on Friday.

Investors are also keeping an eye out on 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.

The "US has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer," Mr Trump tweeted on Wednesday. "We suspect the North Korea problem, although not yet causing a rush to exit will eventually take a negative toll on the markets," said Peter Cardillo, chief market economist at First Standard Financial.

Also on the radar is Mr Trump's first speech specifically on tax policy later in the day. The speech, officials said, would be about "why" reforming the tax code was needed, not about"how" to reform it. "Trump's outline of tax reform today is likely to be well received by the markets," Mr Cardillo said.

At 9:42 a.m. ET (9:42 p.m. Singapore time), the Dow Jones Industrial Average was up 2.2 points, or 0.01 per cent, at 21,867.57, the S&P 500 was up 1.23 points, or 0.05 per cent, at 2,447.53. The Nasdaq Composite was up 18.79 points, or 0.3 per cent, at 6,320.68, on gains in Apple and Amazon .

Eight of the 11 major S&P sectors were lower, with the energy index's 0.52 percent fall leading the decliners.