Wall Street Rebounds As Banks And Chips Spark Buying
US stocks rebounded on Thursday after two consecutive sessions of losses, supported by strong earnings from major banks and upbeat signals from the semiconductor sector.
Shares of Goldman Sachs and Morgan Stanley surged after both lenders posted higher quarterly profits, driven by a pickup in dealmaking activity. Goldman climbed 4.6%, providing the biggest lift to the Dow, while Morgan Stanley advanced 5.8%.
The rally came despite lingering concerns over the banking sector earlier in the week, when mixed earnings and worries over US President Donald Trump’s proposed one-year cap on credit-card interest rates at 10% weighed on sentiment.
Investors appeared to rotate into value and cyclical names. “It’s been growth, tech or bust in this market,” in recent years, said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
Today, “it’s the banks and old-school industrials” that are standouts. The S&P 500 industrials index closed at another record high.
Technology stocks also moved higher, led by chipmakers, after TSMC, the world’s largest producer of advanced artificial intelligence chips, forecast robust annual growth and flagged plans to expand US manufacturing capacity. US-listed shares of the Taiwan-based company jumped 4.4%.
The semiconductor index rose 1.8%, with gains across heavyweights including Nvidia, Broadcom and chipmaking equipment firm Applied Materials.
With the rebound, the Dow Jones Industrial Average gained 292.81 points, or 0.60%, to 49,442.44. The S&P 500 added 17.87 points, or 0.26%, to 6,944.47, while the Nasdaq Composite rose 58.27 points, or 0.25%, to 23,530.02.
Some valuation concerns in technology stocks eased following the semiconductor news. “There was some worry as far as valuations – that they were getting a little too far ahead of themselves,” said Alan Lancz, president of Alan B. Lancz & Associates Inc. in Toledo, Ohio.
He added, “That’s been kind of squashed this morning with the news from Taiwan Semiconductor.”
Beyond large caps, market leadership continued to broaden. Both mid-cap stocks and the Russell 2000 small-cap index have outperformed the S&P 500 so far this year, with the Russell 2000 reaching a record closing high. The equal-weighted S&P 500 has risen about 4% since the end of December, compared with a 1.4% gain for the benchmark index.
Among other financial stocks, BlackRock jumped 5.9% after a market rally boosted fee income and lifted its assets under management to a record US$14.04 trillion in the fourth quarter.
Bank earnings have effectively kicked off the US fourth-quarter reporting season, which is set to gather pace next week as a wider range of companies release results.
Trading activity was heavy, with volume on US exchanges reaching 19.12 billion shares, above the 20-day average of 16.81 billion. On the NYSE, advancing stocks outnumbered decliners by nearly two to one, while gains also outpaced losses on the Nasdaq.
Reuters
