Nationwide’s Mark Hackett noted that the market is “far healthier than perceived”. While the S&P 500 had paused since reaching record highs, the average company is “doing much better” below the surface.
“Today will see a broadening, with the recently weak tech sector driving the S&P 500 potentially to a record high,” said Hackett. “The balance of power remains squarely in the bulls’ favour given the economic strength, earnings acceleration, fiscal and monetary stimulus, and technical tailwinds.”
Taiwan Semiconductor Manufacturing Co’s strong results and forecast helped renew confidence in the AI trade. Earnings from the chipmaker underscored that demand for the technology remained robust. The earnings also lifted chipmaker peers, including Nvidia Corp and Advanced Micro Devices Inc.
Interest in AI has waned in the last few weeks. Fatigue over the technology has turned euphoria into agita as worries over unsustainable capital spending and stretched valuations have made the sector less alluring to traders.
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While TSMC’s results has chip stocks “bouncing very nicely”, helping the entire tech sector and the Magnificent Seven, Miller Tabak’s Matt Maley sees signs of a rotation taking place.
“There is growing evidence that not only are we seeing some ‘rotation’ between different sectors in the marketplace, but we’re also seeing some of that rotation within the tech sector,” Maley said.
Meanwhile, applications for unemployment benefits unexpectedly dropped to the lowest level since November last week. Initial claims decreased to 198,000 in the week ended Jan 10, according to Labor Department data. The figure came below all estimates in a Bloomberg survey of economists.
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The data follows weeks of holiday season volatility. Claims have rarely fallen below 200,000, and Thursday’s data suggests layoffs are not meaningfully picking up at the start of the year. However, this data is still likely to be affected by holiday-related fluctuations.
Federal Reserve Bank of Chicago President Austan Goolsbee said Thursday morning that the central bank’s main priority should be to tame inflation. Getting inflation back to 2% was the “most important thing” facing the bank, Goolsbee said in an interview with CNBC.
Earnings roll on
Earnings season for big banks came to an end, with Morgan Stanley and Goldman Sachs Group Inc being the last two in the cohort to report.
Morgan Stanley shares advanced 3.7% after the lender’s debt bankers increased revenue 93% in the fourth quarter. Debt-underwriting revenue exceeded analyst expectations, helping bring total investment-banking fees to US$2.41 billion, an increase of 47% from a year ago.
Goldman Sachs gained 2.3% after the company posted an all-time Wall Street record for equities trading revenue. That figure was higher than the previous high for any bank, which had been set by Goldman in the second quarter of 2025.
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