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Chip stocks jump after TSMC's record quarterly profit

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PepsiCo ( PEP ) expects smaller decline in annual core profit,

shares up

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June retail sales rise 0.6%

(Updates to the close)

By David French

July 17 (Reuters) -

The S&P 500 stock index and the Nasdaq Composite

both closed at record highs on Thursday, as investors

embraced strong economic data and earnings reports that showed

American consumers remained willing to spend.

The Nasdaq has ended at a record high in six of the previous

seven sessions, and the S&P 500 has had six best finishes since

June 27.

According to preliminary data, the S&P 500

gained 35.32 points, or 0.56%, to end at 6,299.02 points,

while the Nasdaq Composite gained 157.25 points, or

0.76%, to 20,887.74. The Dow Jones Industrial Average

rose 247.64 points, or 0.56%, to 44,502.42.

Wall Street has had a strong run since tumbling after

President Donald Trump's Liberation Day tariff announcements in

early April and then recovering. This week was seen as a proving

ground for these gains though, with a number of key economic

reports and the start of second-quarter earnings season.

Economic data and corporate earnings reports "are

showing that the economic backdrop is still pretty solid, and so

markets have been able to grind higher this week with some data

to support where we are going," said Anthony Saglimbene, chief

market strategist at Ameriprise Financial.

U.S. retail sales bounced back sharply in June, data

showed on Thursday. Investors saw renewed economic momentum and

confidence among consumers, after mixed inflation data which

showed stalled producer prices and a spike in consumer inflation

in the same month.

Investors have been watching for signs of whether

Trump's tariff policies are starting to permeate the U.S.

economy. The Federal Reserve has indicated it will hold off on

interest rate cuts until it can see the inflationary impact of

higher import taxes.

This was reiterated on Thursday by Fed Governor Adriana

Kugler, who said rate cuts are on hold for now, as Trump's

tariffs begin to push up consumer prices.

Traders now peg the odds of a September rate cut at just

over 54%, with a July move nearly ruled out, according to CME's

FedWatch tool.

Accompanying strong retail sales was upbeat commentary

from consumer-facing American companies.

PepsiCo ( PEP ) jumped after forecasting upbeat results,

fueled by demand for energy drinks and healthier sodas, helping

offset concerns about a dip in annual core profit.

United Airlines gained after the carrier projected

stronger demand since early July, offering a rare bright spot

for an industry strained by Trump's budget cuts and trade

tensions.

Rivals Delta and American Airlines ( AAL ) also

climbed.

Technology stocks were also buoyed, in particular U.S.

chipmakers, after TSMC, the world's main producer of

advanced AI chips, posted a record quarterly profit, saying

demand for artificial intelligence was getting stronger.

U.S.-listed shares of TSMC gained, as did Marvell ( MRVL )

and Nvidia ( NVDA ).

Ameriprise's Saglimbene said the blowout TSMC earnings bode

well for chipmakers and the wider technology sector.

"Before we get all the Big Tech earnings in the next

week or two, you're seeing the single source of production of

those (AI) chips saying their demand is very strong. So the

set-up for Big Tech is pretty positive, which is why technology

is leading on the day today," he added.