FX.co ★ Modest Strength Visible On Wall Street As Chip Stocks Rally

At the start of trading on Thursday, stocks showed a significant upward trend; however, over the course of the session, they have retraced some of their gains but remain modestly higher. The initial rise propelled the Dow and the S&P 500 to achieve new record intraday highs.

As it stands, the Dow has climbed 113.85 points, or 0.3%, to 43,191.55. Meanwhile, the Nasdaq has increased by 54.63 points, or 0.3%, to 18,421.71, and the S&P 500 has gained 11.00 points, or 0.2%, reaching 5,853.47.

This modest strength on Wall Street is attributed mainly to a surge in semiconductor stocks, with the Philadelphia Semiconductor Index rising by 2.2%. These stocks are rebounding from a sell-off earlier in the week after Taiwan Semiconductor Manufacturing Company (TSMC) announced a significant increase in third-quarter profits.

TSMC's strong financial performance has alleviated worries about the demand outlook for semiconductors, which were heightened by a recent cautionary note from Dutch chipmaker ASML. As Dan Coatsworth, an investment analyst at AJ Bell, notes, "The fate of the global stock market hinged on TSMC's results, and fortunately, everything is fine in AI land."

Leading the charge is Nvidia (NVDA), a major TSMC customer, which is experiencing a 2.8% rise today.

Further boosting market sentiment is a slew of largely positive U.S. economic data. Notably, a report from the Commerce Department indicated that retail sales in September grew slightly more than anticipated, rising by 0.4% following a 0.1% increase in August. Economists had predicted a 0.3% rise.

When excluding motor vehicle and parts dealers, retail sales elevated by 0.5% in September, up from a 0.2% increase in August. Expectations had been set for a marginal 0.1% uptick in ex-auto sales.

In a separate announcement, the Labor Department revealed an unexpected decline in initial claims for U.S. unemployment benefits for the week ending October 12. Initial jobless claims decreased to 241,000, marking a 19,000 drop from the previous week's revised figure of 260,000. Economists were anticipating a slight increase to 260,000 from the originally reported 258,000 for the prior week.

This surprise reduction in jobless claims counteracts their previous elevation to the highest level since June 17, 2023, when they reached 261,000.

Conversely, the Federal Reserve released data indicating that industrial production in the U.S. fell slightly more than expected in September. The Fed reported a 0.3% decline in industrial production, following a 0.3% increase in August, which was revised downward. Expectations were set for a 0.2% dip compared to the originally reported 0.8% rise for the previous month. This larger-than-expected decrease was partly due to a strike at Boeing and the impact of Hurricanes Helene and Milton.

Internationally, stock markets in the Asia-Pacific region mostly declined during Thursday's trading, with Japan's Nikkei 225 Index falling by 0.7% and China's Shanghai Composite Index dropping by 1.1%.

Meanwhile, major European markets have shifted upwards following the European Central Bank's decision to lower interest rates. The French CAC 40 Index has surged by 1.2%, and both the German DAX Index and the U.K.'s FTSE 100 Index have risen by 0.7%.

In the bond market, after several sessions of upward movement, treasuries are retracing. Consequently, the yield on the benchmark ten-year note, which moves inversely to its price, has increased by 7.7 basis points, now standing at 4.093%.