Wall Street rises on chip rally, upbeat retail sales data
By Lisa Pauline Mattackal and Purvi Agarwal
(Reuters) - Wall Street gained on Thursday, with the S&P 500 and the Dow touching intraday record highs, driven by TSMC's upbeat forecast and a bigger-than-expected rise in monthly retail sales indicating a strong U.S. consumer.
Profit at Taiwan Semiconductor Manufacturing Co, the world's largest contract chipmaker, beat market estimates and the company forecast a jump in fourth-quarter revenue, driven by demand for artificial intelligence chips.
The chipmaker's U.S.-listed shares soared 11.7%, while AI-trade favorite Nvidia (NASDAQ:NVDA ) gained 3.6%.
The optimism spread to other chip stocks, with Broadcom (NASDAQ:AVGO ) adding 4% and Intel (NASDAQ:INTC ) gaining 1.9%, sending the broader Philadelphia SE Semiconductor index 2.7% higher.
These gains put Information Technology in the lead among the 11 S&P 500 sectors, with a 1.3% rise, while Financials extended its gains from the previous session.
Declines in healthcare stocks, however, limited gains on the Dow. Elevance Health plummeted 14.2% after the health insurer slashed its full-year profit forecast, dragging peers UnitedHealth (NYSE:UNH ), which slipped 1.7%, and Centene (NYSE:CNC ), which fell 9%, down with it.
Meanwhile, U.S. retail sales increased 0.4% in September, slightly than expected, supporting the view that the economy maintained a strong pace of growth in the third quarter. Weekly jobless claims fell unexpectedly last week.
"Retail sales being good continues to show how resilient the U.S. consumer is, given how (this) has kind of sent us away from a recession the last couple of years," said Keith Buchanan, senior portfolio manager at GLOBALT Investments.
"The equity markets will always receive good news on the consumer in a positive way, and I think that's the case for this morning's action."
The data supported the picture of healthy growth in the world's largest economy, while keeping bets on a 25-basis-point rate cut at the Federal Reserve's next meeting largely intact at 89.4%, according to CME's FedWatch.
The Dow Jones Industrial Average rose 114.94 points, or 0.27%, to 43,192.64, the S&P 500 gained 22.15 points, or 0.38%, to 5,864.62, and the Nasdaq Composite added 118.82 points, or 0.65%, to 18,485.90.
A broadly upbeat start to the third-quarter earnings season, strong economic data and the U.S. Federal Reserve kicking off its policy-easing cycle have pushed the Dow and the S&P 500 to fresh record highs, with the benchmark index close to the psychologically important 6,000 mark.
Still, analysts have flagged increasingly stretched valuations, high earnings expectations and likely volatility ahead of November's U.S. presidential election as risk factors.
Insurer Travelers Companies (NYSE:TRV ) rose 7% after its third-quarter profit beat Wall Street expectations.
Streaming giant Netflix (NASDAQ:NFLX ) is scheduled to report third-quarter earnings after the bell. Its shares fell 1.5%.
Federal Reserve Bank of Chicago President Austan Goolsbee is slated to speak later in the day.
EV-maker Lucid (NASDAQ:LCID ) tumbled 14% after it said it expects to report a bigger-than-expected loss for the third quarter and announced a public offering of more than 262 million shares.
Declining issues outnumbered advancers by a 1.09-to-1 ratio on the NYSE, and by a 1.23-to-1 ratio on the Nasdaq.
The S&P 500 posted 57 new 52-week highs and two new lows, while the Nasdaq Composite recorded 81 new highs and 21 new lows.
Source: Investing.com
