US stocks rise higher as chip stocks shine

Wall Street's main indexes bounced back on ⁠Thursday after a two-day fall, riding a chip-led rally sparked by TSMC's blockbuster results, while investors sifted through earnings from Morgan Stanley and Goldman Sachs to wrap up big banks' reporting season.

Chip stocks such as Nvidia rose 2%, while Broadcom and Micron gained 1.4% and 1.9%, respectively.

Chipmaking tool companies Applied Materials, Lam Research and ‌KLA all gained over ‌7% each.


The world's main producer of advanced AI chips, TSMC , predicted robust annual growth and flagged more U.S. manufacturing capacity was in the works. U.S.-listed shares of TSMC jumped ‌5.4%.

The broader info-tech sector rose 1.3%, while banks gained 0.9%.

BlackRock, the world's largest asset manager, gained 3.8% after a rally in markets lifted fee income and pushed its assets under management to a record $14.04 trillion in the fourth quarter.

Goldman Sachs and Morgan Stanley both reported a rise in quarterly profit, helped by a flurry of dealmaking. Goldman's shares rose 1.9%, while Morgan Stanley gained 3.7%.

"Some of these (bank stocks) have run up pretty good and even though there's a bit of mediocre earnings and not a lot of misses, there's a lot of unknown headwinds here," said Jason Bottenfield, a wealth manager at Steward Partners.

Financial stocks ‌have come under ‍pressure this week on worries over the impact of a proposed one-year cap on credit card interest rates ‍at 10%, even as some of the banking giants posted robust profit growth.

At 9:34 ‌a.m. ET, the Dow Jones Industrial Average rose 146.42 points, or 0.30%, to 49,296.05, the S&P 500 gained 40.50 points, or 0.58%, to 6,967.10 and the Nasdaq Composite gained 197.64 points, or 0.84%, to 23,669.39.

MARKETS CHURN AMID EARNINGS

With geopolitics and economic data fading into the background, investors are betting on fundamentals as earnings season kicks off, testing whether the rally still has legs.

Wall Street's heavyweights are losing some shine as investors kick off the year by chasing bargains. Bottenfield added that its a pattern that often emerges at the start of the year.

"The broadening is definitely happening."

Money is flowing out of mega-cap tech and ‍into overlooked corners of the market, fueling a rally where the S&P 400 mid-cap and Russell 2000 hit all-time highs earlier this week.

The equal-weighted S&P 500 has risen about 3.6% in January, versus an increase of just 1.1% ‍for the S&P 500.

On ⁠the day, the energy index eased ⁠1% after a two-day rally, as oil prices tumbled.

Meanwhile, the Labor Department's data showed weekly jobless claims rose 198,000 in the week ended January 5, less than economists' estimates of 215,000.

Traders are still pricing in at least two rate cuts by year-end, according to LSEG. Chicago Federal Reserve President Austan Goolsbee said on CNBC that with the job market showing stability, the Fed's focus should stay on bringing inflation down, keeping the door open to cuts later this year.

Markets will also be watching for signals from policymakers, including Fed Board Governor Michael Barr.

Advancing issues outnumbered decliners by a 1.6-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.

The S&P 500 posted 28 new 52-week highs and no new lows, while the Nasdaq Composite recorded 59 new highs and 25 new lows.