U.S. stocks continued to climb during Thursday's early trading session, with the Dow Jones Industrial Average rising by 200 points. The chip sector saw broad-based gains, buoyed by TSMC's earnings report which reignited market confidence in the resilience of AI demand. Brent crude oil fell below $65 per barrel, and the retreat in oil prices provided support to the market. Investors continued to assess earnings reports from major banks.
The Dow Jones Industrial Average increased by 212.51 points, or 0.43%, to 49,362.14; the Nasdaq Composite rose by 174.877 points, or 0.75%, to 23,646.627; and the S&P 500 gained 36.10 points, or 0.52%, to 6,962.70. TSMC's stock price surged after the company once again delivered record quarterly results, reporting a 35% profit increase. TSMC's earnings report rekindled investor confidence in the resilience of artificial intelligence (AI) demand. Driven by TSMC's results, chip stocks including Micron Technology, NVIDIA, and AMD experienced widespread gains on Thursday. Suppliers to TSMC, Applied Materials and Lam Research, also moved higher. The "Magnificent Seven" tech stocks all advanced, albeit with relatively more modest gains. U.S. President Donald Trump signed a proclamation on Wednesday imposing a 25% tariff on certain chip products, including NVIDIA's H200 and AMD's MI325X. However, the proclamation also emphasized that "these tariffs will not apply if the chips are imported to support the construction of the U.S. technology supply chain." In other words, this 25% tariff will not apply to chips imported for the U.S. technology supply chain or those used to enhance domestic manufacturing capacity for semiconductor derivatives. Gary Tan, a portfolio manager at Allspring Global Investments, stated, "TSMC's guidance suggests there is still room for upward revisions to market consensus estimates and supports a more constructive outlook." Kyle Rodda, an analyst at Capital.com, commented, "Sector rotation is occurring on Wall Street, which ultimately weighs on index performance but also indicates that the market's internal structure remains quite robust overall." An example of improving market "breadth" is the S&P 500 Equal Weight Index, which has climbed 3.6% in January after excluding the influence of overweight mega-cap stocks, while the S&P 500 index itself has risen only 1.1%. The small-cap Russell 2000 index has gained nearly 7% this month. Jim Reid, a strategist at Deutsche Bank, noted, "We have seen a more pronounced rotation pattern since the start of the year, with the small-cap Russell 2000 index hitting a new record and outperforming the S&P 500 for the ninth consecutive trading day." Morgan Stanley reported better-than-expected fourth-quarter results. Goldman Sachs' stock edged lower, despite its profit for the most recent quarter exceeding expectations. The retreat in oil prices also provided market support, with both Brent crude and the front-month West Texas Intermediate crude contract falling nearly 3%. Geopolitical risks influenced investor sentiment this week. They initially drove oil prices higher as tensions escalated between the U.S. and Iran, a major OPEC member, intensifying concerns about supply disruptions. Subsequently, oil prices retreated after President Trump indicated he might not attack Iran. Trump administration officials also met with the foreign ministers of Denmark and Greenland on Wednesday, as Trump continued his push for U.S. control over Greenland. A Danish official stated that Denmark and the Trump administration had "fundamental differences" regarding the kingdom's ownership of Greenland, which were not resolved during the meeting. On the economic data front Thursday, U.S. initial jobless claims fell last week, while manufacturing outlooks in both the New York and Philadelphia regions significantly exceeded expectations. Data from the U.S. Labor Department showed that seasonally adjusted initial jobless claims totaled 198,000 for the week ending January 10, a decrease of 9,000 from the previous week and below the Dow Jones estimate of 215,000. The four-week moving average fell to 205,000, its lowest level since January 20, 2024. According to the New York Fed, the Empire State Manufacturing Index for January came in at 7.7, up 11 points from December and better than the expected 1.0. The Philadelphia Fed Manufacturing Index was 12.6, higher than the previous month's -8.8 and far exceeding the expected -4.5. Focus Stocks Optical communication stocks such as Lumentum, Coherent, and Astera Labs moved higher. SanDisk's stock rose after brokerage Bernstein adjusted its price target from $300 to $580. Memory concept stocks including Micron Technology and Western Digital saw broad gains in pre-market trading. Boston Scientific will acquire Penumbra for $14.5 billion. Morgan Stanley's Q4 net revenue exceeded expectations. Music streaming platform Spotify announced subscription price increases in the U.S. and other regions. Bank of America anticipates strong Q4 order growth for GE Vernova and expects adjusted EBITDA to significantly surpass expectations. The FDA is scheduled to make a decision on Eli Lilly's weight-loss drug on April 10. Goldman Sachs is optimistic about Biogen's Leqembi and its R&D pipeline supporting structural changes for revenue and profit growth. KeyBanc downgraded Rocket Lab from "Overweight" to "Sector Weight." Nokia was selected to operate New Zealand's Connexa network, and Morgan Stanley upgraded its rating to "Overweight." TSMC's Q4 results and its 2026 outlook both exceeded expectations.
