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US STOCKS-S&P 500, Dow reach records as earnings lift outlook

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(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.)

* Ford rises after strong earnings

* Tesla tracks best day in over a month

* Indexes up: Dow 0.5%, S&P 0.5%, Nasdaq 0.2% (Updates to late afternoon, adds dateline)

By Caroline Valetkevitch

NEW YORK, July 29 (Reuters) - The S&P 500 and the Dow rose to record highs on Thursday, boosted by robust U.S. earnings and forecasts, while data showed the U.S. economy was above its pre-pandemic level.

The U.S. economy grew solidly in the second quarter, putting the level of gross domestic product above its pre-pandemic peak, but the pace of GDP growth was slower than economists had expected.

Among upbeat reports on Thursday, Ford Motor Co jumped 3.7% as it lifted its profit forecast for the year, while KFC-owner Yum Brands Inc rose 5.9% after beating expectations for quarterly sales.

With GDP numbers below expectations, "people are thinking this is going to slow down the talk about tapering, and that's what people want to see," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. Investors also saw "some pretty good earnings today."

On Wednesday, the Federal Reserve said it was not yet time to start withdrawing its massive monetary stimulus.

Economically sensitive groups including financials, materials and energy led S&P sector gains.

The Dow Jones Industrial Average rose 186.09 points, or 0.53%, to 35,117.02, the S&P 500 gained 23.14 points, or 0.53%, to 4,423.78 and the Nasdaq Composite added 32.36 points, or 0.22%, to 14,794.94.

The S&P 500 real estate sector hit a record high. The Fed said there was "very little support" for cutting the $40 billion in monthly purchases of mortgage-backed securities "earlier" than the $80 billion in Treasuries.

On the down side, Facebook Inc shares fell as the company warned revenue growth would "decelerate significantly" following Apple Inc's recent update to its iOS operating system that would impact the social media giant's ability to target ads.

About half of the S&P 500 companies had reported second-quarter earnings as of Thursday morning. Nearly 91% of those companies beat profit estimates, and second-quarter earnings now are expected to have jumped 87.2% from a year ago, according to Refinitiv data.

Tesla Inc jumped and was the biggest boost to the S&P 500, followed by Apple, which rebounded from Wednesday's declines.

With rising inflation and concerns that higher prices would not be as transient as expected, focus on Friday will be on the June reading of the personal consumption expenditures price index - the Fed's main inflation measure.

Advancing issues outnumbered declining ones on the NYSE by a 2.71-to-1 ratio; on Nasdaq, a 1.27-to-1 ratio favored advancers.

The S&P 500 posted 75 new 52-week highs and 1 new low; the Nasdaq Composite recorded 97 new highs and 40 new lows.

(Reporting by Caroline Valetkevitch in New York Additional reporting by Sagarika Jaisinghani in Bengaluru Editing by Maju Samuel and Matthew Lewis)

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