Closing Bell: AI Trade Rebounds on TSMC Surge

Key Points

• Major indexes snapped a two-day losing streak as strong Taiwan Semiconductor earnings reignited risk appetite.
• Goldman Sachs and Morgan Stanley moved higher after earnings. Goldman slightly missed on revenue but delivered a strong EPS beat.
• TSMC posted 20.5% year-over-year revenue growth and a 35% jump in Q4 profits, citing robust AI chip demand.

Major equity indexes rebounded today after two consecutive sessions of losses for the S&P 500 and the Nasdaq-100, driven by renewed enthusiasm following strong earnings from Taiwan Semiconductor (TSM). The S&P 500 closed up 0.22%, the Nasdaq-100 (NDX) gained 0.32%, and the Russell 2000 outperformed with a 0.86% advance on the session. Utilities, Industrials, and Real Estate led the market higher, while Energy and Health Care were the two lagging sectors.

Goldman Sachs and Morgan Stanley Move Higher After Earnings

Goldman Sachs (GS) and Morgan Stanley (GS) both moved notably higher after reporting earnings and delivering optimistic commentary on their conference calls. Goldman Sachs slightly missed revenue expectations, reporting quarterly revenue of $13.45 billion, but adjusted EPS significantly exceeded consensus, coming in at $14.01 per share versus expectations of $11.65. Morgan Stanley beat both revenue and earnings estimates, driven by strength in trading revenue and improving investment banking activity.

TSMC Brings the AI Trade Back to Life

Overnight, Taiwan Semiconductor (TSM) far exceeded market expectations, with revenue growing 20.5% year over year and Q4 profits surging 35% year over year. The company continues to see strong demand for AI-related chips and is also beginning to see a pickup in smartphone chip demand. TSM plans to increase capital expenditures to expand fabrication capacity in order to meet current and future demand.

Market Events for Tomorrow

• 09:15 AM ET: Capacity Utilization Rate
• 09:15 AM ET: Industrial Production
• 10:00 AM ET: NAHB Housing Market Index
• 11:00 AM ET: FOMC Member Bowman Speaks
• 03:30 PM ET: FOMC Member Jefferson Speaks

Notable Earnings for Tomorrow

• A.M: MTB, PNC, RF, STT, WIT
• P.M: N/A

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