Wall Street higher as data points to strengthening economy

Chances of a rate hike in December have fallen to about 36% from 43% a month ago

Wall Street was higher in late morning trading on Wednesday as upbeat data pointed to strength in the economy.

The Commerce Department said consumer spending, which accounts for more than two-thirds of U S economic activity, increased 0.3 per cent last month after a 0.2 per cent gain in June.

The data comes a day after a report showed GDP grew at its fastest pace in more than two years in the second quarter.

"The outlook for the U.S. and the global economy, remains relatively positive and most investors do not see a recession ahead," said Michael Sheldon, chief investment officer of RDM Financial Group at HighTower.

"Given that backdrop, equity markets are likely to grind higher over the next few quarters and pullbacks are likely to be bought by investors."

However, the core personal consumption expenditures (PCE) price index - the Fed's preferred inflation measure - increased 1.4 percent in the 12 months through July, its smallest year-on-year increase since December 2015.

Core PCE has undershot the U.S. central bank's 2 percent target for the past five years and could diminish expectations of an interest rate increase in December.

Chances of a rate hike in December have fallen to about 36 percent from 43 percent a month ago, according to the CME Group's FedWatch tool.

"The fact that inflation remains below the Fed's 2 percent goal makes it tougher for (the Fed) to raise rates in the fourth quarter," added Sheldon.

Labor Department data showed the number of Americans filing for unemployment benefits rose slightly last week even as the labor market continues to strengthen.

The weekly data precedes the more comprehensive monthly jobs report on Friday, which will help investors gauge the strength of the labor market as they look for clues on the Fed's next move on rates.

Still, the S&P is on track to post a monthly loss for August, after four straight months of gains.

At 10:47 a.m. ET (1447 GMT), the Dow Jones Industrial Average was up 30.33 points, or 0.14 percent, at 21,922.76, the S&P 500 was up 8.8 points, or 0.35 percent, at 2,466.39.

The Nasdaq Composite was up 34.06 points, or 0.53 percent, at 6,402.37.

Nine of the 11 major S&P sectors were higher, with the health index's 0.93 percent rise leading the advancers.

UnitedHealth's 0.7 percent gain provided the biggest boost to the Dow. The Nasdaq biotech index rose 1.4 percent, helped by a rise in Gilead, Celgene and Biogen.

Among stocks, Dollar General fell 8 percent after reporting a slide in second-quarter margins.

Campbell Soup was down 5.9 percent after the company warned that sales for fiscal 2018 could fall. Rival General Mills was down 1.77 percent.

Shoe Carnival surged 26 percent after the footwear retailer's revenue and profit beat estimates.

Advancing issues outnumbered decliners on the NYSE by 2,004 to 718. On the Nasdaq, 1,994 issues rose and 722 fell.