GLOBAL MARKETS-Equities and dollar rise with encouragement from economic data and earnings

By Sinéad Carew and Marc Jones

NEW YORK/LONDON, July 17 (Reuters) - Equities advanced on Thursday with the S&P 500 and the Nasdaq registering record closing highs and the dollar rose as investors were encouraged by the latest crop of economic data and earnings reports while oil futures rose on supply risks in the Middle East.

Data on jobless claims showed that the number of Americans filing new applications for unemployment benefits fell last week, pointing to steady job growth so far in July, though some laid off workers are experiencing long spells of unemployment because of a moderation in hiring.

U.S. retail sales rebounded more than expected in June, but some of the increase likely reflected higher prices for some goods exposed to tariffs.

"In economic data two key releases came out today: retail sales and jobless claims. Both were better than anticipated," said Mike Cornacchioli, investment strategy director and senior vice president at Citizens Private Wealth.

"Those two illustrate the strength of the consumer and the labor market. So, a lot of the fears that were placed on the state of the U.S. economy are overblown and have failed to come to fruition at this point in time. Maybe they will some time down the line, but this data and the data that's come in lately has just reinforced the strength of the U.S. economy."

Cornacchioli also pointed to strong earnings reports as a boost for equities on Thursday.

Taiwan Semiconductor Manufacturing TSM.N, the world's main maker of advanced AI chips, posted record profits ahead of expectations. It warned that future income might be hit by U.S. tariffs, though perhaps not until the fourth quarter. Also, GE Aerospace lifted its profit outlook with jet engine deliveries rising as efforts to fix supply constraints showed results.

"Money continues to flow into equities on expectations for a strong earnings season," said Michael James, equity sales trader at Rosenblatt Securities, Los Angeles.

"Overall the market continues to climb a wall of worry regardless of elevated valuations as people are looking forward beyond this current quarter or the next month to value stocks on 2026 multiples."

After four straight days of losses, Europe's STOXX 600 .STOXX index ended up 0.96%, with a boost from strong earnings reports including record orders at Swiss engineering firm ABB ABBN.S.

Wall Street was boosted by stocks including PepsiCo PEP.O which rallied 7.5% after reporting better-than-expected quarterly results on steady demand in the U.S. and major markets, including Europe. In another positive sign for the consumer, United Airlines UAL.O shares rose after executives said the company has seen strong bookings in the past three weeks.

The S&P 500 .SPX rose 33.66 points, or 0.54%, to 6,297.36 for a record closing high while the Nasdaq Composite .IXIC rose 153.78 points, or 0.74%, to 20,884.27, also a closing record.

The Dow Jones Industrial Average .DJI rose 229.71 points, or 0.52%, to 44,484.49, still below its record closing level. With the Russell 2000 small cap index .RUT rising 1.2% on the day, Rosenblatt's James noted "a healthy rotation into the small cap stocks to provide a little broader participation with the market strength today."

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 5.18 points, or 0.56%, to 926.2, putting it within striking distance of its record levels.

Thursday's market gains follow a dramatic wobble during the prior session when Trump said he was highly unlikely to fire Federal Reserve chair Jerome Powell. However, he left the door open to the possibility of ousting him and renewed his criticism of the central bank chief for not cutting U.S. interest rates.

In currencies, the dollar rose on Thursday after the economic data. While it pulled back from its highs of the day, the dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, was last up 0.32% at 98.66. The euro EUR= was down 0.34% at $1.1594.

Against the Japanese yen JPY=, the dollar strengthened by 0.5% to 148.6 as polls showed Prime Minister Shigeru Ishiba's coalition was in danger of losing its majority in the upper house in upcoming elections in Japan.

U.S. Treasury yields were higher in a relatively choppy session. Yields had briefly spiked higher and then fallen following the sales and jobless claims data, which showed the world's largest economy on a stable footing and supported the Fed's patient stance on monetary easing.

The yield on benchmark U.S. 10-year notes US10YT=RR rose 0.2 basis points to 4.457%, from 4.455% late on Wednesday while the 30-year bond US30YT=RR yield was roughly flat at 5.0135% versus 5.015% in the prior session.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 2.4 basis points to 3.909%, from 3.885% late on Wednesday.

Oil prices settled $1 higher after drones struck Iraqi Kurdistan oil fields for a fourth day, pointing to continued risk in the volatile region.

U.S. crude CLc1 settled up 1.75%, or $1.16 at $67.54 per barrel and Brent LCOc1 settled at $69.52 a barrel, up 1.46%, or $1.00.

Gold prices were lower after the upbeat U.S. economic data aided the Fed’s cautious stance on rate cuts.

Spot gold XAU= fell 0.22% to $3,338.89 an ounce. U.S. gold futures GCc1 fell 0.35% to $3,340.80 an ounce.