Stock Indexes Rally on Chip Demand Optimism

The S&P 500 Index ($SPX) (SPY) today is up +0.55%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.00%.  March E-mini S&P futures (ESH26) are up +0.50%, and March E-mini Nasdaq futures (NQH26) are up +0.97%.

Stock indexes are moving higher today, led by a rally in chip makers after Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest dedicated contract chipmaker, revived confidence in the sustainability of artificial-intelligence demand.  TSMC forecasted stronger-than-expected Q1 sales and boosted its 2026 capital expenditure forecast to $52 billion-$56 billion from $40.9 billion in 2025. 

Stocks added to their gains today on signs of strength in the US economy after weekly jobless claims unexpectedly fell to a 6-week low, and the Jan Empire and Jan Philadelphia Fed business outlook surveys rose more than expected. 

Easing geopolitical risks in Iran are also supportive for equities after President Trump said he had been assured that Iran would stop killing protesters, in a signal that the US could hold off on a threatened military response to the widespread demonstrations.  WTI crude oil sank more than -4% on the news.

US weekly initial unemployment claims unexpectedly fell -9,000 to a 6-week low of 198,000, showing a stronger labor market than expectations of an increase to 215,000.

The US Jan Empire manufacturing survey general business conditions rose +11.4 to 7.7, stronger than expectations of 1.0.

The US Jan Philadelphia Fed business outlook survey rose +21.4 to a four-month high of 12.6, stronger than expectations of -1.4.

Atlanta Fed President Raphael Bostic said the Fed needs to stay restrictive because he expects inflation pressures to continue through 2026.

President Trump told Reuters that he "has no plans" to fire Fed Chair Powell despite a Justice Department probe into the central bank's renovation.

The Supreme Court didn’t rule on challenges to President Trump’s tariffs on Wednesday.  The court did not say when it will issue its next opinions but could schedule more decisions for next Tuesday and Wednesday, when the justices are again in session.

The market’s focus this week will be on economic news and any fresh news on the Federal Reserve.  On Friday, Dec manufacturing production is expected to fall -0.1% m/m.  Also, the Jan NAHB housing market index is expected to increase by +1 to 40.

Q4 earnings season is set to begin this week as bank earnings start to roll in.  According to Bloomberg Intelligence, S&P earnings growth is expected to climb by +8.4% in Q4.  Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6%.

The markets are discounting the odds to 5% for a -25 bp rate cut at the FOMC’s next meeting on January 27-28.

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up by +0.70%.  China’s Shanghai Composite closed down -0.33%.  Japan’s Nikkei Stock 225 closed down -0.42%.

Interest Rates

March 10-year T-notes (ZNH6) today are down by -4 ticks.  The 10-year T-note yield is up +0.6 bp to 4.138%.  Today's strength in stocks has curbed safe-haven demand for T-notes.  Also, an easing of geopolitical risks in Iran is reducing the safe-haven appeal of T-notes after President Trump signaled he may hold off on attacking Iran after he was assured that the Iranian government would stop killing protesters.  T-notes added to their losses on the better-than-expected US economic news on weekly jobless claims and the Jan Empire and Jan Philadelphia Fed business outlook surveys. 

European government bond yields are moving higher today.  The 10-year German bund yield is up +1.8 bp to 2.832%.  The 10-year UK gilt yield is up +3.5 bp to 4.375%.

Eurozone Nov industrial production rose +0.7% m/m, stronger than expectations of +0.5% m/m

UK Nov manufacturing production rose +2.1% m/m, stronger than expectations of +0.4% m/m and the largest increase in 9 months.

UK Nov GDP rose +0.3% m/m, stronger than expectations of +0.1% m/m.

Swaps are discounting a 1% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.

US Stock Movers

Chip makers are climbing today after TSMC forecasted stronger-than-expected Q1 net sales and boosted its 2026 capital spending plans.  Applied Materials (AMAT) is up more than +8% to lead gainers in the Nasdaq 100.  Also, KLA Corp (KLAC) and Lam Research (LRCX) are up more than +7%, and ASML Holding Nv is up more than +6%.  In addition, ARM Holdings (ARM) is up more than +3%, and Broadcom (AVGO), Intel (INTC), and Micron Technology (MU) are up more than +1%. 

Defense stocks are sliding today on the easing of geopolitical risks in Iran after President Trump signaled the US would not strike Iran if it stopped killing protesters. Huntington Ingalls Industries (HII), L3Harris Technologies (LHX), and Northrop Grumman (NOC) are down more than -2%.    Also, Lockheed Martin (LMT) and General Dynamics (GD) are down more than -1%.

Energy producers and energy service providers are under pressure today, with WTI crude oil down by more than -4%.  APA Corp (APA) is down more than -4%, and Devon Energy (DVN), Diamondback Energy (FANG), and Occidental Petroleum (OXY) are down more than -2%.  In addition, Marathon Petroleum (MPC), Phillips 66 (PSX), Halliburton (HAL), ConocoPhillips (COP), and Valero Energy (VLO) are down more than -1%.

Penumbra (PEN) is up more than +12% after Boston Scientific agreed to buy the company for about $14.5 billion, or $374 a share. 

Talen Energy (TLN) is up more than +9% after signing an agreement to acquire three natural gas power plants from Energy Capital Partners for $3.45 billion. 

Sandisk (SNDK) is up more than +8% to lead gainers in the S&P 500 after Benchmark Company LLC raised its price target on the stock to $450 from $260. 

Calavo Growers (CVGW) is up more than +8% after Mission Produce agreed to buy the company for about $27 a share in cash and stock. 

Black Rock (BLK) is up more than +4% after reporting Q4 net inflows of $341.71 billion, above the consensus of $287.49 billion. 

Morgan Stanley (MS) is up more than +3% after reporting Q4 FICC sales and trading revenue excluding DVA of $3.67 billion, better than the consensus of $3.55 billion. 

Dell Technologies (DELL) is up more than +2% after Barclays upgraded the stock to overweight from equal weight with a price target of $148.

Boston Scientific (BSX) is down more than -4% to lead losers in the S&P 500 after agreeing to buy Penumbra for about $14.5 billion, or $374 a share. 

MoonLake Immunotherapeutics (MLTX) is down more than -4% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $10. 

Strategy (MSTR) is down more than -3% to lead losers in the Nasdaq 100 after TD Cowen cut its price target on the stock to $440 from $500.

GE HealthCare Technologies (GEHC) is down more than -2% after UBS downgraded the stock to sell from neutral with a price target of $77. 

Albertson’s Cos Inc (ACI) is down more than -2% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $14. 

Nutanix (NTNX) is down more than -3% after Barclays downgraded the stock to equal weight from overweight.

Earnings Reports(1/15/2026)

Blackrock Inc (BLK), First Horizon Corp (FHN), Goldman Sachs Group Inc/The (GS), JB Hunt Transport Services Inc (JBHT), Morgan Stanley (MS).