Stocks Climb Before the Open as TSMC Reignites AI Optimism, U.S. Economic Data and Earnings in Focus

March S&P 500 E-Mini futures (ESH26) are up +0.37%, and March Nasdaq 100 E-Mini futures (NQH26) are up +0.74% this morning after Taiwan Semiconductor Manufacturing Co. renewed confidence in the sustainability of AI demand.

U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. (TSM) jumped over +5% in pre-market trading after the world’s biggest contract chipmaker posted a record Q4 profit and projected faster-than-expected 2026 revenue growth. The biggest surprise was TSMC’s annual capital expenditure forecast for this year, set at $52 billion to $56 billion, well above its $40.9 billion capex for 2025. TSMC’s chief executive, C.C. Wei, said at an earnings call that the decision to ramp up spending came after months of checks with major customers and reflects confirmed AI-driven demand. “When you’ve got a business like TSMC spending at this level, investors should be prepared for sustained AI demand rather than a short-lived boom,” said Zavier Wong, market analyst at eToro. AI-related U.S. heavyweights advanced in pre-market trading, with Broadcom (AVGO) rising over +2% and Nvidia (NVDA) gaining more than +1%. TSMC suppliers Applied Materials (AMAT) and Lam Research (LRCX) climbed more than +6% in pre-market trading.

Investors now await a fresh batch of U.S. economic data, quarterly reports from more big banks, and remarks from Federal Reserve officials.

In yesterday’s trading session, Wall Street’s three main equity benchmarks closed lower. The Magnificent Seven stocks fell, with Amazon.com (AMZN) and Meta Platforms (META) dropping over -2%. Also, most chip stocks slid, with Broadcom (AVGO) falling more than -4% and Arm Holdings (ARM) dropping over -2%. In addition, Wells Fargo (WFC) sank more than -4% after the bank posted weaker-than-expected Q4 net interest income. On the bullish side, Mosaic (MOS) climbed over +5% and was among the top percentage gainers on the S&P 500 after Morgan Stanley raised its price target on the stock to $35 from $33.

Economic data released on Wednesday showed that U.S. retail sales climbed +0.6% m/m in November, stronger than expectations of +0.5% m/m, and core retail sales, which exclude motor vehicles and parts, grew +0.5% m/m, stronger than expectations of +0.4% m/m. Also, the U.S. producer price index (PPI) for final demand rose +3.0% y/y in November, stronger than expectations of +2.7% y/y, and the core PPI rose +3.0% y/y, stronger than expectations of +2.7% y/y. In addition, U.S. December existing home sales rose +5.1% m/m to a 2-3/4-year high of 4.35 million, stronger than expectations of 4.21 million.

“This data likely doesn’t change anything for the Federal Reserve, which ended up cutting rates back in December even without knowing this data,” said Clark Bellin at Bellwether Wealth. “We expect the Federal Reserve to remain on hold for the next six months and then cut rates by one or two times in the second half of 2026.”

Minneapolis Fed President Neel Kashkari said on Wednesday that the U.S. economy is showing “resilience” and that he does not see the “impetus” for the Fed to cut interest rates this month. Also, Atlanta Fed President Raphael Bostic said interest rates should stay at a restrictive level that weighs on the economy, as policymakers still have more work to do on inflation. At the same time, Philadelphia Fed President Anna Paulson said, “I see inflation moderating, the labor market stabilizing, and growth coming in around 2% this year. If all of that happens, then some modest further adjustments to the funds rate would likely be appropriate later in the year.” In addition, Fed Governor Stephen Miran said the Trump administration’s deregulatory agenda gives the central bank another reason to keep lowering interest rates.

The Fed said on Wednesday in its Beige Book survey of regional business contacts that U.S. economic activity picked up at a “slight to modest pace” in most districts since mid-November. “This marks an improvement over the last three report cycles where a majority of districts reported little change,” according to the Beige Book. The report said employment levels were largely unchanged in eight of the Fed’s 12 regional districts, while wages grew at a “moderate” pace, with “multiple contacts reporting that wage growth had returned to ‘normal’ levels.” The report also noted that most districts saw prices grow at a “moderate” pace.

Meanwhile, U.S. rate futures have priced in a 95.0% chance of no rate change and a 5.0% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month.

In tariff news, U.S. President Donald Trump said on Wednesday that he has, for now, decided against imposing tariffs on rare earths, lithium, and other critical minerals, instead directing his administration to seek supplies from international trading partners.

Fourth-quarter corporate earnings season is gathering pace, and investors look ahead to new reports from major U.S. banks such as Goldman Sachs (GS) and Morgan Stanley (MS), as well as notable companies like BlackRock (BLK) and J.B. Hunt Transport Services (JBHT). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +8.4% increase in quarterly earnings for Q4 compared to the previous year.

Today, investors will focus on U.S. Initial Jobless Claims data, which is set to be released in a couple of hours. Economists expect this figure to be 215K, compared to last week’s number of 208K.

The U.S. Philadelphia Fed Manufacturing Index will also be released today. Economists anticipate that the Philly Fed manufacturing index will stand at -1.6 in January, compared to last month’s value of -10.2.

The New York Fed-compiled Empire State Manufacturing Index will come in today. Economists foresee the January figure coming in at 0.80, compared to -3.90 in December.

The U.S. Import Price Index for November will be released today as well. The data was originally scheduled for release on December 16th, but was delayed due to the fallout from the longest-ever government shutdown. Economists expect the import price index to drop -0.1% m/m in November.

In addition, market participants will parse comments today from Atlanta Fed President Raphael Bostic, Fed Governor Michael Barr, Richmond Fed President Tom Barkin, and Kansas City Fed President Jeff Schmid.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.141%, up +0.07%.

The Euro Stoxx 50 Index is up +0.52% this morning, hitting a new record high as a wave of positive corporate earnings reports and benign economic data boosted sentiment. Technology stocks led the gains on Thursday after TSMC posted a record Q4 profit and gave blockbuster capital expenditure guidance for 2026. Asml Holding (ASML.NA), which counts TSMC as its largest customer, rose more than +4%. “We view today’s update from TSMC as materially positive for European semiconductor equipment stocks...given their exposure to AI demand,” according to Citi analysts. Financial stocks also climbed, supported by strong updates from Schroders and Partners Group. At the same time, defense and energy stocks retreated. Data from the Office for National Statistics released on Thursday showed that the U.K. economy grew more than expected in November. Separately, the Federal Statistics Office said the German economy expanded 0.2% in 2025, showing signs of recovery after nearly a decade of stagnation. The economy ministry said in its monthly report that Germany’s economy is likely to stabilize further at the start of 2026 before gathering momentum later in the year. In addition, data showed that the Eurozone’s monthly industrial production grew more than expected in November. Meanwhile, investors continued to watch geopolitical developments after talks between officials from the U.S., Denmark, and Greenland in Washington on Wednesday ended in “fundamental disagreement” over Denmark’s ownership of Greenland. In corporate news, Swedbank Ab (SWEDA.S.DX) gained more than +4% after the U.S. Department of Justice ended its long-running investigation into the bank.

U.K. GDP, France’s CPI, Spain’s CPI, Eurozone’s Industrial Production, and Eurozone’s Trade Balance data were released today.

U.K. November GDP rose +0.3% m/m and +1.4% y/y, stronger than expectations of +0.1% m/m and +1.1% y/y.

The French December CPI rose +0.1% m/m and +0.8% y/y, in line with expectations.

The Spanish December CPI rose +0.3% m/m and +2.9% y/y, in line with expectations.

Eurozone’s November Industrial Production rose +0.7% m/m and +2.5% y/y, stronger than expectations of +0.5% m/m and +2.0% y/y.

Eurozone’s November Trade Balance came in at 9.9 billion euros, weaker than expectations of 14.8 billion euros.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.33%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.42%.

China’s Shanghai Composite Index closed lower today, extending losses from the previous session after regulators tightened margin financing rules. Defense stocks were among the biggest losers on Thursday. Limiting losses, semiconductor stocks advanced after TSMC reported a record quarterly profit and provided blockbuster capital expenditure guidance for 2026. Data released on Thursday after the market close showed that China’s new yuan loans continued to expand in December. Meanwhile, China’s central bank announced on Thursday cuts to certain sector-specific interest rates to give the economy an early boost, and signaled that it has room to cut interest rates and banks’ reserve requirements. People’s Bank of China Deputy Governor Zou Lan said at a press briefing that the central bank will lower rates on its structural policy tools by 0.25 percentage point, cutting the rate on one-year relending facilities to 1.25%. Zou also said the PBOC will raise quotas for several relending tools to bolster support for agriculture, technology and innovation, as well as private enterprises. In addition, China will cut the minimum downpayment ratio for commercial property mortgages to 30% to help lower inventory in the commercial real estate market. In corporate news, Trip.com tumbled over -19% in Hong Kong after China’s top market regulator said it is probing the online travel giant for potential antitrust violations. At the same time, China Vanke rose more than +3% after the state-backed property developer disclosed four new proposals to extend the repayment period on its overdue bonds.

Japan’s Nikkei 225 Stock Index closed lower today, retreating from a record high as investors decided to take some profits. Technology stocks fell on Thursday, tracking overnight losses in their U.S. peers. Japanese equities were also pressured by a rebound in the yen. The yen rebounded from a 1-1/2-year low on Wednesday following fresh warnings from Finance Minister Satsuki Katayama against “excessive” moves and a U.S. Treasury statement urging “sound” policy from the Bank of Japan to address currency volatility. Data released on Thursday showed that Japan’s wholesale inflation slowed in the year to December due to falling fuel costs, signaling that lower crude oil prices were providing some relief to companies facing rising labor and other raw material costs. Meanwhile, a ruling Liberal Democratic Party official confirmed on Wednesday that Prime Minister Sanae Takaichi plans to dissolve parliament next week, with a vote potentially slated for February 8th. The election is expected to bolster confidence in Takaichi, giving her pro-market LDP greater scope to implement economic policies and reforms. However, Capital Economics’ Marcel Thieliant said Japan’s upcoming general election is unlikely to lead to a major loosening of fiscal policy, noting that the large supplementary budget passed last year has weakened the case for further fiscal expansion. In corporate news, Toyota Industries climbed over +6% after Toyota Motor agreed to increase its offer to take the company private. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +1.85% to 30.25.

The Japanese December PPI rose +0.1% m/m and +2.4% y/y, in line with expectations.

Pre-Market U.S. Stock Movers

U.S.-listed shares of Taiwan Semiconductor Manufacturing Co. (TSM) jumped over +5% in pre-market trading after the world’s biggest contract chipmaker posted a record Q4 profit, projected faster-than-expected 2026 revenue growth, and provided blockbuster capital expenditure guidance for this year.

AI-related U.S. heavyweights advanced in pre-market trading following TSMC’s results and guidance, with Broadcom (AVGO) rising over +2% and Nvidia (NVDA) gaining more than +1%. TSMC suppliers Applied Materials (AMAT) and Lam Research (LRCX) climbed more than +6% in pre-market trading.

Dell Technologies (DELL) rose over +2% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with an unchanged price target of $148.

BlackRock (BLK) gained more than +1% in pre-market trading after the world’s largest asset manager reported stronger-than-expected Q4 results.

Rocket Lab (RKLB) fell about -2% in pre-market trading after KeyBanc downgraded the stock to Sector Weight from Overweight.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Thursday - January 15th

Goldman Sachs (GS), Morgan Stanley (MS), BlackRock (BLK), JB Hunt (JBHT), First Horizon National (FHN), Insteel Industries (IIIN), Bank7 (BSVN).