Strong Retail Sales and Chip Stocks Rally Lifts S&P 500 to New Highs

Barry Adams
17 Oct, 2024
New York City

Market sentiment on Wall Street was positive after retail sales rose in September and artificial intelligence-linked stocks got another boost. 

The S&P 500 index increased 0.2%, and the S&P 500 index edged up 0.3% as investors bid up tech stocks.

Chip stocks led the gainers after Taiwan Semiconductor reported strong third-quarter results and boosted its sales outlook for the current year. 

Taiwan Semi's quarterly results boosted other chip stocks, and Nvidia jumped 2.2%, AMD advanced 1.5%, and Broadcom gained 2.7%. 

Investors reacted positively to the latest updates on retail sales and weekly jobless claims. 

Retail and food services sales increased at an annual rate of 1.7% in September, but the pace of increase was the slowest in eight months, according to the U.S. Census Bureau. 

Sales are adjusted for seasonal factors but not adjusted for inflation. 

Preliminary retail and food services sales increased 0.4% from the previous month to $714.4 billion. 

Sales at food services and drinking places increased 1% from the previous month; miscellaneous stores advanced 4%, but declined 3.3% at electronic and appliance stores and fell 1.6% at gasoline stations. 

Sales at auto dealers were flat. 

However, sales excluding food services, auto dealers, building materials stores, and gasoline stations, which are used to calculate gross domestic product, jumped 0.7%. 

Weekly initial jobless claims declined 19,000 to 241,000 in the week ending October 12, the U.S. Department of Labor reported Thursday. 

The jobless claims eased from the previous week after disruptions from Hurricanes Milton and Helena spiked filings. 

Despite the decline in the last week, claims are still running higher than the average earlier in the year, highlighting softening labor market conditions since its post-pandemic peak. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.2% to 5,855.0, the Nasdaq Composite rose 0.3% to 18,417.52, and the Russell 2000 index fell 0.1% to 2,285.49. 

The yield on 2-year Treasury notes edged higher to 3.99%, 10-year Treasury notes inched up to 4.08%, and 30-year Treasury bonds inched higher to 4.36%.

WTI crude oil increased $0.21 to $70.71 a barrel, and natural gas prices edged up 2 cents to $2.38 a thermal unit.

Gold rose by $14.17 to $2,688.17 an ounce, and silver increased by $0.02 to $31.76.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 103.78.

 

U.S. Stock Movers

Taiwan Semiconductor Manufacturing Company increased 12% to $210.36 after the company reported sharply higher sales and earnings in the third quarter. 

Revenue increased 36% to $23.5 billion, and gross margin expanded to 57.8% from 54.3% a year ago. 

Net income in the quarter jumped to NT 325.08 billion, or $10.05 billion, from NT 210.8 billion a year ago. 

Gross margin for the quarter was 57.8%, operating margin was 47.5%, and net profit margin was 42.8%. 

In the third quarter, shipments of 3-nanometer accounted for 20% of total wafer revenue; 5-nanometer accounted for 32%; 7-nanometer accounted for 17%. 

Advanced technologies, defined as 7-nanometer and smaller chip technologies, accounted for 69% of total wafer revenue. 

The company guided fourth-quarter revenue to fall between $26.1 billion and $26.9 billion. 

Lucid Group dropped 14.9% to $2.80 after the electric vehicle company announced a stock offering to sell 262.5 million. 

The company also said its major stockholder, Ayar Third Investment, and an affiliate of the Saudi Arabia-controlled sovereign wealth fund have agreed to purchase 374.7 million shares in a concurrent private placement.