US STOCKS-Dow ends at another record high as chip stocks, retail data support

Updates to close

By David French

Oct 17 (Reuters) - The Dow Jones Industrial Average ended higher on Thursday, its fourth record close in the last five sessions, as stronger-than-expected monthly retail sales indicated a robust U.S. consumer and chips stocks were buoyed by TSMC's upbeat forecast.

The other main Wall Street benchmarks, the S&P 500 and the Nasdaq Composite, finished largely unchanged.

Taiwan Semiconductor Manufacturing Co 2330.TW, the world's largest contract chipmaker, beat market estimates for profit and forecast a jump in fourth-quarter revenue, driven by demand for artificial intelligence chips.

The chipmaker's U.S.-listed shares TSM.N soared, while AI-trade favorite and TSMC customer Nvidia NVDA.O gained.

The optimism spread to other chip stocks, sending the broader Philadelphia SE Semiconductor index .SOX higher.

Fresh U.S. data confirmed 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.

U.S. retail sales increased 0.4% in September, slightly more than expected, while weekly jobless claims fell unexpectedly.

A broadly upbeat start to the third-quarter earnings season, strong economic data and the Fed kicking off its policy-easing cycle have pushed the Dow and the S&P 500 to record highs in recent sessions, with the latter close to the psychologically important 6,000 mark.

According to preliminary data, the S&P 500 .SPX lost 0.99 points, or 0.02%, to end at 5,841.48 points, while the Nasdaq Composite .IXIC gained 6.46 points, or 0.04%, to 18,373.54. The Dow Jones Industrial Average .DJI rose 164.01 points, or 0.38%, to 43,241.71.

Josh Jamner, investment strategy analyst at ClearBridge Investments, said investors have been revising economic and earnings growth expectations as robust data eased worries about a recession.

However, there was still a question of leadership in markets, and as investors wrestled with this, and the level of rotation happening, this has left the market slowly grinding higher.

"Overall, it's allowing the market to advance, but maybe in a somewhat more restrained fashion than what otherwise might be expected," Jamner said.

Highlighting this was the fact the Dow advanced for the second straight day, but small cap indexes fell. The Russell 2000 .RUT and the S&P Small Cap 600 .SPCY were down, having both closed at their highest in nearly three years on Wednesday.

A majority of S&P 500 sectors were also in negative territory, including rate-sensitive indexes such as utilities .SPLRCU and real estate .SPLRCR.

One other quirk is that U.S. equity benchmarks have advanced in recent days even as U.S. Treasury yields have crept up. On Thursday, the yield on the benchmark 10-year note US10YT=TWEB rose 7.5 basis points to 4.091%.

In earnings-related moves, Travelers Companies TRV.N and Blackstone Group BX.N advanced after both the insurer and the money manager posted third-quarter profit which beat market expectations.

The S&P Banks index .SPXBK rose for the fifth straight session as a slew of larger regional banks posted third-quarter numbers. M&T Bank MTB.N and Synovus Financial SNV.N rose, but Truist Financial TFC.N dropped.

Outside financials, health insurer Elevance Health ELV.N plummeted after slashing its full-year profit forecast.

(Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru and David French in New York; Editing by Pooja Desai and Richard Chang)

((LisaPauline.Mattackal@thomsonreuters.com))