By Devik Jain and Shreyashi Sanyal
(Reuters) - The S&P 500 and Nasdaq rebounded from two days of declines on Thursday as beaten-down chipmakers led gains, but losses in Walt Disney (NYSE:DIS) due to slowing subscriber growth in its streaming video service weighed on the Dow.
A record-breaking rally in Wall Street's main indexes paused earlier this week after recent inflation data suggested the current spike in prices will take longer to cool amid snarled global supply chains.
But Arthur Hogan, chief market strategist at National Securities in New York, said investors were able to look beyond the near term as "we just have more demand than supply."
"That's likely a good thing for future growth in earnings," he said.
The Philadelphia SE Semiconductor index rose 1.6%, rebounding from its worst session in more than six weeks, with Nvidia Corp offering the biggest boost after brokerage Susquehanna raised the chipmaker's price target.
Seven of the 11 major S&P 500 sector indexes were higher, led by economy-focused materials and energy.
"Going into the end of the year and early 2022, I definitely think the cyclical trade continues to show strength. I also really like small caps in this space, especially because of inflationary pressures," said Liz Young, head of investment strategy at SoFi.
The small-cap Russell 2000 index was 0.9% higher, after falling more than 2% in the previous two sessions.
Walt Disney Co dropped 7.1% to lead declines among Dow components, as it reported the smallest rise in Disney+ subscriptions since the service's launch and posted downbeat profit at its theme park division.
At 11:51 a.m. ET, the Dow Jones Industrial Average was down 50.47 points, or 0.14%, at 36,029.47, the S&P 500 was up 12.88 points, or 0.28%, at 4,659.59 and the Nasdaq Composite was up 131.66 points, or 0.84%, at 15,754.37.
Mega-cap technology and communications stocks including Google-owner Alphabet (NASDAQ:GOOGL) Inc, Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc, formerly known as Facebook (NASDAQ:FB), Apple Inc (NASDAQ:AAPL) and Amazon.com Inc (NASDAQ:AMZN) rose between 0.3% and 0.7%.
Department store stocks rallied after Dillard's Inc reported strong quarterly results, pushing up its shares 15.5% to a record high and spurring a 3% jump in the S&P 1500 Department Store index.
Amazon-backed electric-vehicle maker Rivian Automotive Inc surged 22.1%, adding to the nearly 30% gain on its blockbuster trading debut.
Industry peers such as Nikola Corporation, Lordstown Motors Corp, Fisker Inc and Lucid Group (NASDAQ:LCID) advanced between 3.6% and 14.4%.
Tapestry Inc climbed 9.4% after the Coach handbag maker lifted its annual sales forecast, boosted by a strong rebound in demand for luxury goods.
Market participants were also watching developments around the nomination of the Federal Reserve Chair, with President Joe Biden still weighing whether to keep Jerome Powell for a second term or elevate Fed Governor Lael Brainard to the post.
Advancing issues outnumbered decliners by a 1.64-to-1 ratio on the NYSE and a 1.45-to-1 ratio on the Nasdaq. The S&P index recorded seven new 52-week highs and five new lows, while the Nasdaq recorded 76 new highs and 97 new lows.