Premarket: Wall Street futures rise as TSMC sparks semiconductor rally

U.S. stock index futures ticked higher on Thursday after TSMC delivered a knockout quarter, sparking a fresh rally in chipmakers, while ‍Wall Street ​braces for earnings from the financial heavyweights.

The bounce follows a bruising session that left the major indexes reeling. The S&P 500 and the Nasdaq posted their sharpest drops of the year so far, while the Dow pared midday losses to finish essentially unchanged.

Chip stocks such as Nvidia rose 1.5 per cent, while Broadcom and Micron gained 2.5 per cent and 3.5 per cent, respectively, in premarket trading on Thursday.

Chipmaking ⁠tool companies Applied Materials and Lam Research rose 8.3 per cent each, and KLA gained 6.3 per cent.

The gains came on the back of Taiwan’s TSMC, the world’s main producer of advanced AI chips, strong results and a sturdy growth outlook that signaled that more U.S. manufacturing capacity is on the way.

U.S.-listed shares of TSMC jumped 6.7 per cent.

BlackRock, the world’s largest asset manager, gained 2 per cent after reporting ‌a higher fourth-quarter profit, as a ‍rally in markets lifted fee income and pushed its assets under management to a record.

Goldman Sachs fell ‍0.2 per cent and Morgan Stanley rose 0.9 per cent before their quarterly reports that ‌would wrap up earnings from major Wall Street lenders.

Financial stocks have come under pressure this ⁠week on worries over the impact of a proposed one-year cap on credit card interest rates at 10 per cent, even as some of ​the banking giants posted robust profit growth.

Investors are also rotating out of richly valued tech and other growth stocks to more unloved parts of the market that hold attractive valuations.

S&P 500 materials and industrials indexes clinched new peaks, while real estate and energy hit multi-month highs this week, as the tech-laden S&P 500 slid to a two-week low.

The S&P 400 mid-cap and ​Russell 2000 small also clinched new peaks this week.

At 06:52 a.m. ET, Dow E-minis were up 45 points, or 0.09 per cent, S&P 500 E-minis were up 26.75 points, or 0.38 per cent, and Nasdaq 100 E-minis were up 221.5 points, or 0.86 per cent.

With geopolitical risks and economic indicators having little sway over equities, investors are zeroing in on fundamentals as the fourth-quarter earnings season gets underway, which may reveal whether the market’s historic rally still has legs.

Analysts expect S&P 500 companies to report 8.8 per cent average growth in ⁠quarterly profit from a year ago, according to LSEG IBES data.

Meanwhile, the Labor Department’s data at 8:30 a.m. ⁠ET is expected to show weekly jobless claims rose to 215,000 in the week ended January 5.

Traders are still pricing in at least two ‌rate cuts by year-end, according to LSEG.

Markets will also be closely watching for fresh signals from policymakers, including Federal Reserve board Governor Michael Barr and regional Fed chiefs Raphael Bostic, Tom Barkin, and Jeffrey Schmid. They are scheduled to speak later in the day.

“We expect the labor market to remain soft, and two additional payroll reports ahead of the March policy meeting are likely to be followed by ‌a 25-basis-point interest rate cut, which should continue to support stocks,” UBS analysts said. 

Oil prices tumbled from multi-month highs on Thursday and gold fell back from a record peak, as investor ​demand for safe-haven assets subsided on hopes that President Donald ‍Trump was backing away from threats of U.S. military action against Iran.

Tech stocks got a boost from Taiwan’s TSMC, the world’s biggest producer of advanced AI chips, which posted a forecast-smashing 35 per cent jump in fourth-quarter profit.

Shares in Dutch chip equipment maker ASML hit a record ‍high, which ​in turn helped push Europe’s STOXX 600 up 0.4 per cent, back towards record levels.

Currencies steadied, including the yen, which hit its weakest since July 2024 against the U.S. dollar on Wednesday. It retraced some of that decline after Japanese authorities issued a series of verbal warnings that suggested they may intervene to support the currency.

Trump said on Wednesday afternoon he had been told that killings ⁠in Iran’s crackdown on protests were easing and that he believed there was no current plan for large-scale executions, adopting a wait‑and‑see posture after earlier threatening intervention.

His statement knocked Brent crude futures down 3.3 per cent to $64.34 a barrel on Thursday, after they had risen to a high of $66.82 the day before.

Gold eased back from a record $4,642.72 an ounce to trade at $4,615.7, down around 0.1 per cent on the day.

The U.S. dollar was steady against other major currencies on Thursday. It was held at 158.35 against the yen, roughly ‌unchanged from levels late on Wednesday, having dropped to an overnight low of 158.095.

Prime Minister Sanae Takaichi plans to call a snap parliamentary election as early as February 8. Her spending plans have sparked concern among investors about the impact on government finances, while the Bank of Japan appears more reticent to raise interest rates to temper inflation, both of which have weighed on the yen for months.

The euro was a touch weaker at $1.1636, while the pound hovered ‌around $1.3414, having shrugged off data that showed the British economy grew more strongly than expected in November.

Reuters