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

Economic Data - U.S. retail sales increased by +0.6% month-over-month in November, surpassing expectations of +0.5% [1] - Core retail sales, excluding motor vehicles and parts, grew by +0.5% month-over-month, exceeding expectations of +0.4% [1] - The U.S. producer price index (PPI) for final demand rose by +3.0% year-over-year in November, stronger than the expected +2.7% [1] - Core PPI also increased by +3.0% year-over-year, above the anticipated +2.7% [1] - December existing home sales rose by +5.1% month-over-month to 4.35 million, higher than the expected 4.21 million [1] Stock Market Performance - Wall Street's three main equity benchmarks closed lower, with notable declines in the Magnificent Seven stocks, including Amazon.com (AMZN) and Meta Platforms (META) dropping over -2% [2] - Chip stocks also fell, with Broadcom (AVGO) down more than -4% and Arm Holdings (ARM) dropping over -2% [2] - Wells Fargo (WFC) sank more than -4% after reporting weaker-than-expected Q4 net interest income [2] - On a positive note, Mosaic (MOS) climbed over +5% after Morgan Stanley raised its price target on the stock [2] Corporate Earnings and Forecasts - Taiwan Semiconductor Manufacturing Co. (TSM) shares jumped over +5% in pre-market trading after reporting a record Q4 profit and projecting faster-than-expected revenue growth for 2026 [4][19] - TSMC's capital expenditure forecast for this year is set at $52 billion to $56 billion, significantly higher than the $40.9 billion capex for 2025 [4] - AI-related stocks advanced in pre-market trading, with Broadcom (AVGO) rising over +2% and Nvidia (NVDA) gaining more than +1% [20] - 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 [9] Economic Outlook and Federal Reserve - Federal Reserve officials indicated that the U.S. economy is showing resilience, with no immediate impetus for interest rate cuts [6] - The Fed's Beige Book reported that U.S. economic activity picked up at a "slight to modest pace" in most districts since mid-November [7] - U.S. rate futures indicate a 95.0% chance of no rate change at the upcoming Fed meeting [8] International Market Developments - The Euro Stoxx 50 Index rose +0.52%, reaching a new record high, driven by positive corporate earnings and economic data [13] - The U.K. economy grew more than expected in November, with GDP rising +0.3% month-over-month and +1.4% year-over-year [14] - Eurozone's November industrial production rose +0.7% month-over-month and +2.5% year-over-year, exceeding expectations [15]