Stocks Boosted by Chip Demand Optimism

Economic Indicators - The US January Philadelphia Fed business outlook survey increased by +21.4 to a four-month high of 12.6, surpassing expectations of -1.4 [1] - The US January Empire manufacturing survey rose by +11.4 to 7.7, exceeding expectations of 1.0 [1] - Weekly initial unemployment claims in the US unexpectedly fell by -9,000 to a six-week low of 198,000, contrary to expectations of an increase to 215,000 [1] Stock Market Performance - Stock indexes closed higher, with the S&P 500 Index up +0.26%, the Dow Jones up +0.60%, and the Nasdaq 100 up +0.32% [5] - A rally in chip makers was led by Taiwan Semiconductor Manufacturing Co (TSMC), which forecasted stronger-than-expected Q1 sales and increased its 2026 capital expenditure forecast to $52 billion-$56 billion from $40.9 billion in 2025 [4] - Energy producers and service providers experienced a sell-off as WTI crude oil prices dropped more than -4% [13] Company-Specific Developments - Morgan Stanley reported Q4 FICC sales and trading revenue of $3.67 billion, exceeding the consensus of $3.55 billion, leading to a +5% increase in its stock price [16] - Goldman Sachs reported Q4 FICC sales and trading revenue of $3.11 billion, stronger than the consensus of $2.95 billion, resulting in a +4% increase in its stock price [17] - Calavo Growers saw its stock rise by more than +13% after Mission Produce agreed to acquire the company for about $27 a share in cash and stock [15] Earnings Expectations - The Q4 earnings season is set to begin, with S&P earnings growth expected to climb by +8.4% in Q4, and +4.6% excluding the Magnificent Seven megacap technology stocks [7] - The market is currently discounting a 5% chance of a -25 basis point rate cut at the FOMC's next meeting on January 27-28 [7]