US equity indexes rose intraday as stronger-than-expected retail sales signaled economic growth that won't jeopardize interest-rate cuts, and Taiwan Semiconductor Manufacturing's quarterly results lifted chip stocks. The Nasdaq Composite rose 0.5% to 18,466.2, with the S&P 500 up 0.3% to 5,860.3 and the Dow Jones Industrial Average climbing 0.4% to 43,249.7 after midday Thursday.
The technology sector led the gainers, while utilities, real estate and consumer staples were among the decliners. In economic news, US retail sales rose by 0.4% in September versus the 0.3% increase expected in a survey compiled by Bloomberg and the previous month's 0.1% gain. This positive surprise in retail sales indicates that consumer spending remains robust, further supporting the narrative of ongoing economic expansion. However, US industrial production fell by 0.3% in September, which was worse than expectations for a 0.2% decrease anticipated in a survey compiled by Bloomberg, following a downwardly revised 0.3% increase in August.
The Federal Reserve attributed this decline in industrial production to a strike at a major producer of civilian aircraft which hindered total IP growth by an estimated 0.3% in September, alongside the adverse effects of two hurricanes that subtracted another estimated 0.3%. Desjardins noted that retail sales suggest the US economy continues to grow "at a healthy pace despite a drop in industrial production." The data from September also revealed that jobs and inflation metrics pushed a prospective second rate cut of 50 basis points off the table, and while "we still expect 25 basis-point cuts in November and December," a pause "may not be too far off," as stated by the Canadian financial service cooperative. In labor market news, initial jobless claims last week fell by 19,000 to 241,000, according to the Department of Labor.
The consensus in a survey of analysts by Bloomberg had anticipated claims at 258,000. Additionally, the prior week's reading was revised upward by 2,000 to 260,000, reflecting a slight improvement in job trends. Though recent hurricanes and the Boeing strike continue to create ripples in jobless claims, Oxford Economics' lead US economist Nancy Vanden Houten remarked in an email that "looking past these factors, we think the claims data are consistent with a labor market that has cooled but isn't collapsing, allowing the Fed to proceed with future rate cuts at a measured pace." As for Treasury yields, almost all US Treasury yields rose, with the 10-year yield increasing by 7.9 basis points to 4.1% and the two-year rate climbing 4.3 basis points higher at 3.99%.
The CBOE Volatility Index, known as the fear gauge for investors, dropped 2.7% to 19.06. In the broader market, chip stocks from Broadcom to Nvidia showed some of the most significant gains on the Nasdaq. This surge followed Taiwan Semiconductor's announcement of higher-than-anticipated Q3 results and encouraging Q4 sales prospects.
Following this report, Taiwan Semiconductor's shares surged by 12% in recent trading. Conversely, Elevance Health reported an unexpected drop in Q3 adjusted earnings, leading to a 12% slump in shares, marking the biggest drop on the S&P index for the day. In the commodities market, West Texas Intermediate crude oil experienced a decline of 1% to $69.84 a barrel, reflecting broader market sentiments.
Excluding inventories in the Strategic Petroleum Reserve, commercial crude oil stocks decreased by 2.2 million barrels in the week ended Friday, following a prior gain of 5.8 million barrels the week before, while the anticipated increase was only 1.5 million, according to a Bloomberg survey at 7:30 am ET. Gold rose 0.6% to $2,707.01 an ounce, whereas silver dipped by 0.6% to $31.79..