GLOBAL MARKETS-S&P 500, Nasdaq hit record highs; euro drops on soft data

* Chip stocks drive tech rally
* Downbeat Boeing, Caterpillar earnings drag Dow lower
* New U.S.-China trade talks expected next week
* European stocks flat following weak PMIs
* Euro hits two-month low

(Updates to U.S. market close)
By Stephen Culp
NEW YORK, July 24 (Reuters) - Tech companies led the S&P 500
and the Nasdaq to record closing highs on Wednesday but the Dow
lost ground on downbeat earnings, while the euro dropped to a
two-month low, pressured by soft economic data.
The tech rally was fueled by hints from Texas Instruments
Inc TXN.N that the slowdown in semiconductor demand would not
be as long as feared.
But Boeing Co BA.N and Caterpillar Inc CAT.N dragged the
blue chip Dow lower after their second-quarter earnings fell
short of analyst expectations.
Boeing posted its biggest loss in a decade, owing to the
grounding of its 737 MAX aircraft, while Caterpillar was
challenged by weak China sales in the face of the trade
war. "Today's an emblematic day, showing the uneven effect of
tariffs on the market," said Chris Wolfe, chief investment
officer at First Republic Private Wealth Management in San
Francisco. "Caterpillar, Boeing and other big companies that
require a large global sales base are suffering."
"Until you see resolution of the trade war these companies
will continue to suffer," Wolfe added. "But the tariffs haven't
hit technology in the same way."
Investors were encouraged in recent days by hopes for trade
negotiations and expectations the European Central Bank and the
U.S. Federal Reserve will ease monetary policy.
The Dow Jones Industrial Average .DJI fell 79.22 points,
or 0.29%, to 27,269.97, the S&P 500 .SPX gained 14.09 points,
or 0.47%, to 3,019.56 and the Nasdaq Composite .IXIC added
70.10 points, or 0.85%, to 8,321.50.
A series of purchasing manager index (PMI) readings in the
United States and Europe were weaker than expected, capping
gains in equity markets worldwide.
"The underlying thread in the PMIs is an important one,"
Wolfe added. "The market's approaching a great divide. Growth is
slowing but equity prices are rising. That's usually a state of
the world that doesn't last."
The pan-European STOXX 600 index .STOXX rose 0.05% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.30%.
PMI data showed euro zone manufacturing contracting for the
sixth straight month, dragging the euro to a two-month low
against the dollar. The dollar index .DXY , tracking the greenback against six
major currencies, rose 0.01%, with the euro EUR= down 0.13% to
$1.1137.
Sterling GBP= was last trading at $1.2481, up 0.36% on the
day, after falling for several sessions as market participants
feared the looming possibility of a no-deal Brexit under
Britain's new prime minister, Boris Johnson.
The Canadian dollar fell 0.09% versus the greenback at 1.31
per dollar.
"Throughout the world there's now a race to have the least
expensive currency," said David Carter, chief investment officer
at Lenox Wealth Advisors in New York. "This is one reason so
many central banks are easing policy."
U.S. Treasuries yields fell in line with yield declines in
European government debt after the downbeat economic data fueled
expectations that the European Central Bank and the Fed will
lower interest rates. Benchmark 10-year notes US10YT=RR last rose 8/32 in price
to yield 2.0463%, from 2.074% late on Tuesday.
The 30-year bond US30YT=RR last rose 23/32 in price to
yield 2.5741%, from 2.607% late on Tuesday.
Oil prices dropped after failing to find support from a
large decrease in U.S. crude stockpiles and simmering
geopolitical tensions. U.S. crude CLc1 settled at $56.88 per barrel, down 1.6%,
while Brent crude LCOc1 settled at $63.18, down 1% on the day.
Spot gold XAU= added 0.6% to $1,425.14 an ounce but
remained short of last week's peak of $1,452.60.

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