9 months ago
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Updated Thu, Oct 17, 2024, 6:44 AM 2 min read
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Techs led US stocks higher on Thursday as TSMC's (TSM) upbeat outlook eased worries about AI chip demand, with the next batch of earnings on deck. Strong retail sales data also helped lift the major averages.
The tech-heavy Nasdaq Composite (^IXIC) rose more than 0.9%, while the S&P 500 (^GSPC) added 0.6%. The Dow Jones Industrial Average (^DJI) rose above the flatline to hold near record highs after the major averages rebounded to close with gains.
Contract chipmaker TSMC posted a 54% jump in quarterly profit to beat Wall Street estimates and raised its forecast for 2024 revenue growth amid surging AI demand. The outlook boost from the main chipmaker for Apple (AAPL) and Nvidia (NVDA) reassured a market spooked by ASML's (ASML) downbeat sales forecast, reviving hopes for an AI boom.
TSMC's US-listed shares climbed 8%, poised to cross a $1 trillion market valuation if the gains hold in the regular session. Its forecast helped spur a rally chip stocks including Arm (ARM), Broadcom (AVGO), and Nvidia.
On the data front, retail sales jumped 0.4%, more than the 0.3% rise expected, giving credence to the argument the economy could be reaccelerating following a surprisingly strong September jobs report. Weekly jobless claims came in at 241,000, far below expectations, and a drop from the prior week's upwardly revised 260,000. The data released Thursday morning was watched by investors debating whether the Federal Reserve will hold off from cutting interest rates in November.
After a stellar showing by big banks, the focus is now on Big Tech earnings to wipe away the disappointments of the last quarter. After the bell, Netflix becomes the first "Magnificent Seven" megacap to report, with Wall Street on watch for price-hike news to potentially lift the stock.
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Tech leads stocks higher on TSMC outlook, strong retail sales data
The major averages rose on Thursday with tech stocks leading the gains after chipmaker TSMC's (TSM) upbeat outlook helped send the semiconductor sector higher.
The tech-heavy Nasdaq Composite (^IXIC) rose 0.9%, while the S&P 500 (^GSPC) added 0.6%. The Dow Jones Industrial Average (^DJI) rose 0.3%.
Strong economic data also helped lift stocks. September's retail sales rose 0.4% versus estimates of 0.3% — a sharp increase from August's 0.1% rise.
Meanwhile, jobless claims for the week ended Oct. 12 came in at 241,000, versus estimates of 259,000.
Retail sales in September rise more than expected, jump 0.4%
September's retail sales rose 0.4% versus estimates of 0.3% — a sharp acceleration off August's 0.1% growth.
Meanwhile, jobless claims for the week ended Oct. 12 came in at 241,000, versus estimates of 259,000. The prior week's reading was revised up to 260,000.
The data released Thursday morning gives fuel to the argument that the economy could be reaccelerating following a strong September jobs report. Investors were watching the data for clues on what the Federal Reserve's interest rate move will be at the next FOMC meeting in November.
TSMC soars on earnings beat, lifting chip stocks
US-listed shares of Taiwan Semiconductor Manufacturing Company (TSM) surged 9.6% in premarket trading, putting the stock in position for an all-time high after its third-quarter earnings beat analyst estimates. TSMC recorded a 54% jump in profit and raised its full-year revenue outlook.
TSMC manufactures chips for Nvidia (NVDA) and its rival Advanced Micro Devices (AMD) as well as Broadcom (AVGO) and many other tech firms. Nvidia shares jumped 3%, AMD rose 2.7%, and Broadcom jumped 2.8% premarket on the news.
Here's a look at TSMC's results:
The chip stocks' rally partially reverses the sector's losses earlier this week, driven by fears over potential further US trade restrictions and a gloomy report from semiconductor equipment manufacturer ASML.
Analysts at Needham, Bernstein, Barclays, and other investment firms reiterated their buy ratings on TSM stock on Thursday morning. Of the Wall Street analysts tracked by Bloomberg who cover the company, some 23 recommend buying the stock, while only one analyst has a Hold rating.
On average, analysts see shares rising to about $217 each over the next 12 months, per Bloomberg data.
Good morning. Here's what's happening today.
Earnings: Netflix (NFLX), Blackstone (BX), Travelers (TRV), First National Bank (FBAK), Western Alliance (WAL), WD-40 (WDFC)
Economic data: Initial jobless claims; Retail sales (September); Philadelphia Fed Business Outlook, (October); Industrial production (September); NAHB housing market index (October); Leading Index, (March); Existing home sales, (March)
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