U.S. stocks rebounded on Thursday, marking a recovery from consecutive losses earlier in the week. This surge was primarily fueled by optimistic forecasts from semiconductor giant TSMC, which reported impressive fourth-quarter profits that bolstered investor confidence in the AI sector. The Dow Jones Industrial Average gained about 0.6%, while the S&P 500 and Nasdaq Composite climbed roughly 0.3% and 0.25%, respectively.
Taiwan Semiconductor Manufacturing Company (TSMC) experienced a remarkable 35% increase in its fourth-quarter profits, leading to a surge in its stock and related chip stocks, including Nvidia and ASML. TSMC announced plans to invest $56 billion in the upcoming year to support AI-based technology advancements, reflecting a commitment to the burgeoning demand for AI tools and chips.
The financial sector also saw positive momentum following robust earnings reports from Goldman Sachs and Morgan Stanley. Goldman achieved a new record in equity trading revenue, exceeding expectations with $4.31 billion in Q4 revenues. Both banks' strong performances contributed to lifting investor sentiment across the financial markets.
In the energy sector, oil prices fell significantly, driven by easing geopolitical tensions in Iran. The price of Brent crude dropped to $63.79 per barrel, and West Texas Intermediate fell to $59.19. Investors reacted positively to indications that military action from the U.S. might diminish, which further impacted the pricing dynamics.
Overall, about 60.9% of U.S. stocks were advancing on Thursday, showcasing solid market participation. Small-cap stocks in the Russell 2000 index outperformed, while sectors such as Industrials, Materials, and Energy observed substantial gains running parallel to strong bank earnings. On the downside, some stocks, including Regencell Bioscience and Reddit Inc., experienced declines, illustrating a mixed bag within the market that mostly favored large-cap and financial stocks.
As the market turns its focus to the upcoming economic data and additional earnings reports, the outlook remains cautiously optimistic. The sustained interest in tech and financial sectors could indicate broader market resilience. However, investors should monitor potential headwinds, such as shifts in global economic policies and their impacts on sectors heavily linked to technological advancements.