Wall Street gives up gains as GDP raises Fed concerns

NEW YORK (Reuters) - U.S. stocks were flat on Wednesday, paring earlier gains as a strong read on second-quarter economic growth sparked concerns the Federal Reserve may adjust its stimulus earlier than expected.

Major indexes opened higher but lost their gains throughout morning trading. While the Nasdaq remained in positive territory, helped by biotech shares, the Dow was pressured by a drop in insurer UnitedHealth Group Inc .

Gross domestic product grew at a 4 percent annual rate in the second quarter, above the 3 percent rate that had been expected and a sharp reversal from the weather-impacted first quarter, when the economy contracted a revised 2.1 percent.

The data comes ahead of a statement from the Federal Open Market Committee this afternoon, as the Fed concludes its latest policy meeting. The central bank is widely expected to trim monthly asset purchases to $25 billion from $35 billion, and investors are looking for any hint on when officials could start to reverse their monetary accommodation.

"The 4 percent number was startlingly good, and it has increased anxieties that the Fed may change its policies," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

"The report may not be enough to change today's statement, but it comes after several datapoints suggesting things are firming, which could mean the Fed can't be as passive as was proposed in recent meetings."

Separately, the ADP National Employment Report showed companies hired 218,000 workers in July, below analysts' projections and less than June's total.

The Dow Jones industrial average fell 66.69 points or 0.39 percent, to 16,845.42, the S&P 500 lost 2.5 points or 0.13 percent, to 1,967.45 and the Nasdaq Composite added 11.98 points or 0.27 percent, to 4,454.68.

Biotechnology stocks boosted The Nasdaq for a second straight day. The Nasdaq biotech index was up 1.8 percent after Amgen Inc posted better-than-expected earnings and raised its outlook, sending shares up 6 percent to $130.67.

Regeneron Pharmaceuticals Inc , jumped 9.8 percent to $334.46 after reporting positive results from a Phase III trial.

Insurance stocks fell after Humana Inc , WellPoint Inc and Aflac Inc all reported lower earnings, though WellPoint's profit was above expectations.

Humana fell 6.3 percent to $119.49, WellPoint lost 2.2 percent to $110.02 and Aflac slid 3.8 percent to $60.72. UnitedHealth lost 2.9 percent to $81.85 as the Dow's biggest percentage decliner.

Fellow Dow component American Express Co reported adjusted earnings in line with expectations; shares fell 1.3 percent to $90.52.

On the upside, Twitter Inc surged 21 percent to $48.25, its biggest ever one-day advance, after reporting monthly active users rose a better-than-expected 24 percent in the second quarter.

The results bolstered support for other social media stocks. Facebook Inc rose 1.8 percent to $75 while LinkedIn Corp rose 3.6 percent to $186.26.

While this earnings season has been positive in aggregate, with more companies than usual beating expectations for both earnings and revenue, there have been some high-profile disappointments from UPS and Amazon.com Inc .

(Editing by Nick Zieminski)

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