By Michael Wursthorn and Georgi Kantchev 

The Dow Jones Industrial Average and the S&P 500 climbed to hit new intraday highs Thursday as expectations for another surge in corporate profits helped investors look past the latest trade sparring between the U.S. and China.

The blue-chip index is on track to close at a new high for the first time since Jan. 26, up 220 points, or 0.8%, to 26626. The S&P 500 is also poised to top its Aug. 29 record and is trading 0.6% higher to 2926. Meanwhile, the technology-heavy Nasdaq Composite added 0.9% to 8022 and is within 1.5% of its August high.

Major indexes moved higher alongside a jump in bond yields this month, a sign that the market is shrugging off worries of how the Federal Reserve's pace of economic tightening could potentially roil stocks. A booming U.S. economy has helped, investors said, with several saying that the torrid pace of growth appears likely to outlive the trade tensions that have rocked stocks this year.

"The good economic news has put us into a bit of a momentum streak," said Larry Peruzzi, managing director of international equity trading at Mischler. "And with bond yields going higher, people are willing to take more risk and put more money into the equity side."

The U.S. economy is on its strongest footing in years, with the rate of unemployment at its lowest level in nearly two decades and economic output growing at the fastest rate since 2014, and the outlook got even rosier Thursday. Initial jobless claims, a proxy for layoffs across the U.S., fell to its lowest level since 1969, the Labor Department said.

Analysts credit the boom in U.S. growth to the tax overhaul passed last year. The changes, which included a cut to the corporate tax rate, sent corporate profits sharply higher through the first two quarters of the year, and analysts expect third-quarter earnings to be just as strong.

S&P 500 companies are projected to grow profits by 19% from a year earlier, according to FactSet, after already posting growth rates of 25% for the first two quarters of the year.

The expectation for strong profit growth is driving investors to continue buying shares of technology companies, a sector that includes some of the fastest-growing companies in the stock market, some money managers said. That helped push tech companies in the S&P 500 up 1.1% Thursday.

Still, trade tensions continue to linger in the background and have the potential to knock stocks back if the U.S., China or other countries ratchet up their tactics. So far, investors are optimistic that trade tensions will eventually cool, especially after the U.S. said it would stagger its latest levies on Chinese imports.

"The fundamental backdrop continues to be very solid, but I won't be surprised to see more anxiousness in the market as trade continues to be an issue," said Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management. "Any headlines about dialogue between trading partners help sentiment."

But trade's impact on the global economy could be more acute since other regions of the world, including Europe and Asia, are seeing more sluggish growth compared with the U.S.

Citigroup said in a report to clients that a worsening trade environment represents "a material risk to growth into 2019." The bank lowered its forecast for global growth this year to 3.3%, the first downward revision since October 2017, with the same rate expected next year.

Investors are looking to next week's Federal Reserve meeting, with most expecting the U.S. central bank to raise interest rates. The market currently sees a 94% chance of a rate rise at the meeting, according to Fed-fund futures tracked by CME Group. Traders were also eyeing the central bank's projected path for 2019.

The 10-year U.S. Treasury yield rose to 3.074%, near its high for the year. Yields move inversely to prices.

Investors continued to monitor developments in Turkey, where Finance Minister Berat Albayrak Thursday announced lower growth projections and pledged to focus government action on savings, following a 40% plunge in the lira this year. The currency was last down 1% against the dollar.

In Asia, Japan's Nikkei Stock Average finished flat while Hong Kong's Hang Seng was up 0.3%.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

(END) Dow Jones Newswires

September 20, 2018 11:14 ET (15:14 GMT)