Taiwan Semiconductor Manufacturing (TSMC) reported impressive earnings results, setting the stage for the Nasdaq to lead the Dow and S&P 500 higher today. Investors are also eagerly awaiting key financial reports from Bank of America and Morgan Stanley. Wall Street is hoping to build on the significant gains seen midweek after cooler inflation data led to a sharp drop in Treasury yields.
The CAC 40 in France outperformed other European indices, bolstered by luxury goods stocks like Richemont, Kering, LVMH, and Hermes. London’s FTSE 100 also rose, benefiting from higher copper prices that lifted mining stocks. U.S. Treasury yields saw a slight increase from their recent nine-day lows following softer inflation data.
The 10-year Treasury yield dropped to 4.653%. Market analysts suggest the significant moves were more due to an unwinding of overly pessimistic positions rather than fresh cash inflows. Financial heavyweights, including Bank of America, Morgan Stanley, UnitedHealth, U.S. Bancorp, PNC Financial Services, and First Horizon, are set to report earnings before the market opens.
Nasdaq gains on TSMC earnings boost
J.B. Hunt Transport Services will release results after the close. Key economic indicators to watch today include U.S. weekly initial jobless claims, December retail sales data, import price index for December, Philadelphia Fed manufacturing survey for January, business inventories for November, homebuilder confidence index for January, and the Senate confirmation hearing for Scott Bessent, President-elect Trump’s nominee for Treasury Secretary.
Nasdaq 100 futures are up 0.3%, positioning the index to lead the day’s gains. S&P 500 futures are flat, while Dow Jones Industrial Average futures are up 0.2%. On Wednesday, the Dow Jones Industrial Average rose by 703 points (1.65%) to 43,222, the S&P 500 gained 107 points (1.83%) to 5,950, and the Nasdaq Composite increased by 467 points (2.45%) to 19,511.
Kathleen Brooks of XTB noted that the market is pricing in at least one rate cut from the Fed this year, with expectations that U.S. interest rates will end the year below 4%, supporting risk sentiment. Russ Mould of AJ Bell highlighted that strong earnings from TSMC, driven by the artificial intelligence theme, have boosted market sentiment towards tech stocks, with Nvidia shares also seeing pre-market gains. However, a report by Bloomberg regarding China’s potential investigation into the illegal dumping of legacy chips by U.S. firms caused early gains in U.S. index futures to be pared back.
Stay tuned for more updates as the trading day progresses.