U.S. growth bounces back in second quarter

US economic growth accelerated more than expected in the second quarter and the decline in output in the prior period was less steep than previously reported, bolstering views for a stronger performance in the last six months of the year.

Gross domestic product expanded at a 4 per cent annual rate as activity picked up broadly after shrinking at a revised 2.1 per cent pace in the first quarter, the Department of Commerce said.

That pushed GDP above the economy's potential growth trend, which analysts put somewhere between a 2 per cent and 2.5 per cent pace.

US stocks fell for a second day as an early rally sparked by better-than-forecast economic growth faded before a Federal Reserve decision on monetary policy.

The Standard & Poor's 500 Index fell 0.2 per cent to 1,966.43 points in mid-morning trade, after rising as much as 0.5 per cent earlier. The Dow Jones Industrial Average lost 67.16 points, or 0.4 per cent, to 16,844.95. The Nasdaq 100 Index increased 0.2 per cent.

"The GDP number was great, but the general concern is that we're ahead of ourselves and let's be sure before we keep marching forward," said Tom Sudyka, president of Lawson Kroeker Investment Management. "That cautiousness is probably keeping us from getting really bullish."

Three rounds of monetary stimulus from the Fed have helped fuel a five-year bull market as the S&P 500 almost tripled from 2009. The gauge, which has gone without a 10 per cent correction since 2011, is up 6.5 per cent this year and trades at 18 times reported earnings, near the highest level in four years.