Joey Solitro
Stocks closed mostly higher Thursday as investors cheered the latest round of corporate earnings. A solid reading on retail sales also helped boost sentiment too.
Starting with the earnings calendar, Taiwan Semiconductor Manufacturing (TSM) blew Wall Street away with its third-quarter results.
For the three-month period ended September 30, the semiconductor manufacturer said earnings jumped 50% year-over-year, while revenue rose 36%. TSM also issued a strong outlook for its fourth quarter, citing encouraging demand for artificial intelligence (AI) and smartphone chips.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Needham analyst Charles Shi expects this impressive growth to continue over the next few years "primarily driven by steady introductions of new technology nodes that are largely unaffected by industry cyclicality."
He recommends "TSM stock as a core holding for investors who look to invest in semiconductors, which we view as the foundation of the expanding digital economy."
As a result of its impressive beat-and-raise quarter, the semiconductor stock soared 9.8% and closed above the $1 trillion market-cap threshold for the first time ever. TSM's surge also had a halo effect on other chipmakers, including Nvidia (NVDA, +0.9%) and Broadcom (AVGO, +2.7%).
Elevance Health earnings pressured by rising Medicaid costs
Elsewhere, Elevance Health (ELV) stock tumbled 10.6% after the health insurance company reported lower-than-expected earnings for its third quarter and cut its full-year profit forecast due to "unprecedented challenges" and rising costs in its Medicaid business.
Still, most of Wall Street remains upbeat on ELV. "We believe the power of Elevance's idiosyncratic long-term growth drivers has been significantly underappreciated by investors," writes Baird analyst Michael Ha in an October 15 note.
Positive developments in its Carelon healthcare services segment have the company "fully on its way to closing the valuation multiple gap to both UnitedHealth Group (UNH, -0.9%) and Humana (HUM, +4.2%)," he adds.
Lucid shares sink on stock offering news
Lucid Group (LCID) was another notable decliner, plunging 18.0% after the electric vehicle maker announced a public stock offering of nearly 262.5 million shares. The company also warned that it anticipates third-quarter losses from operations to range between $765 million to $790 million, more than the $752 million analysts forecast.
Stifel analyst Stephen Gengaro has a Hold rating on the EV stock amid concerns over Lucid's significant cash burn. However, he also thinks the company's Lucid Air electric car is an "outstanding vehicle" and believes the recently unveiled Gravity SUV will give it access to the lucrative sports utility vehicle segment.
Retail sales come in strong for September
In economic news, data from the Census Bureau show retail sales rose 0.4% from August to September and were up 1.7% year over year. The month-over-month gain exceeded the 0.3% increase economists were expecting as well as the 0.1% improvement seen the month prior.
Excluding automobiles and gasoline, retail sales were up 0.7% on a monthly basis and 3.7% annually.
"The economy is in pretty good shape," says Bill Adams, chief economist at Comerica. "With the Fed expected to continue lowering interest rates through the turn of the year, credit-sensitive sectors of the economy should perk up in coming quarters, sustaining the economic expansion into 2025."
Jim Swift, CEO of Buxton, a leading consumer intelligence platform, notes that the September retail sales data "reflects growing consumer confidence as well as evolving dynamics in spending habits." Indeed, nonstore retailers, which include e-commerce sales, were up 7.1% year over year.
"Retailers with strong online and physical store integration are well-positioned to capitalize on this momentum as we head into the holiday season," Swift adds.
As for the main indexes, the Dow Jones Industrial Average gained 0.4% to 43,239 and the Nasdaq Composite added 0.04% to 18,373. The S&P 500 ran out of steam near the close, ending down 0.02% at 5,841.
Related content
- Election Updates: What Candidates Are Saying About Your Money
- The Best Growth Stocks to Buy
- Kiplinger's Economic Calendar for This Week
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
-
IRS Says You Made a Tax Return Mistake? A New Law Could Help You Fight BackTax Law Updated taxpayer protections change what the IRS must explain on error notices and how long you have to respond.
-
I'm a Tax Attorney: These Are the Year-End Tax Moves You Can't Afford to MissDon't miss out on this prime time to maximize contributions to your retirement accounts, do Roth conversions and capture investment gains.
-
I'm an Investment Adviser: This Is the Tax Diversification Strategy You Need for Your Retirement IncomeSpreading savings across three "tax buckets" — pretax, Roth and taxable — can help give retirees the flexibility to control when and how much taxes they pay.
-
Dow Rises 497 Points on December Rate Cut: Stock Market TodayThe basic questions for market participants and policymakers remain the same after a widely expected Fed rate cut.
-
Could an Annuity Be Your Retirement Safety Net? 4 Key ConsiderationsMore people are considering annuities to achieve tax-deferred growth and guaranteed income, but deciding if they are right for you depends on these key factors.
-
I'm a Financial Pro: Older Taxpayers Really Won't Want to Miss Out on This Hefty (Temporary) Tax BreakIf you're age 65 or older, you can claim a "bonus" tax deduction of up to $6,000 through 2028 that can be stacked on top of other deductions.
-
JPMorgan's Drop Drags on the Dow: Stock Market TodaySmall-cap stocks outperformed Tuesday on expectations that the Fed will cut interest rates on Wednesday.
-
Meet the World's Unluckiest — Not to Mention Entitled — Porch PirateThis teen swiped a booby-trapped package that showered him with glitter, and then he hurt his wrist while fleeing. This is why no lawyer will represent him.
-
Smart Business: How Community Engagement Can Help Fuel GrowthAs a financial professional, you can strengthen your brand while making a difference in your community. See how these pros turned community spirit into growth.
