Closing Recap
U.S. stocks finished broadly higher on Thursday, with the major indices rebounding from a recent bout of selling as a blockbuster earnings report from semiconductor giant Taiwan Semiconductor (TSM) reignited enthusiasm for the AI trade. The Nasdaq led the charge, but the rally was broad-based, with the Dow and S&P 500 also posting solid gains. The small-cap Russell 2000 surged to a new all-time high, continuing its impressive start to the year. The positive sentiment was further supported by a fresh batch of dovish U.S. economic data, including a surprise drop in weekly jobless claims, which kept hopes for Federal Reserve rate cuts alive. The U.S. dollar and Treasury yields both fell on the news, while precious metals saw some profit-taking after their recent explosive run.
Key Takeaways
- TSM’s Blowout Earnings Spark Tech Rally: A stellar earnings report and massive capex guidance from semiconductor giant TSM ignited a powerful rally in the tech sector, particularly in semi-equipment names.
- Broad Rally Lifts Indices, Small Caps Hit New High: The rally was broad-based, with nearly all S&P sectors finishing in the green. The Russell 2000 surged to a new all-time high, outperforming for a 10th straight day.
- Dovish Data Keeps Rate Cut Hopes Alive: A surprise drop in weekly Jobless Claims to their lowest level since 2022, combined with weak regional Fed surveys, reinforced the market’s expectation for Fed easing.
- Bullish Sentiment Soars: The AAII bull-bear spread jumped to +21.3%, its most bullish reading in months, as investors embrace the new year rally.
- Precious Metals Pull Back on Profit-Taking: Gold and silver both fell as a slight easing of geopolitical tensions and profit-taking weighed on the metals after their recent record-breaking run.
- Oil Plunges on De-escalation and Softer Data: Crude oil tumbled over 4% after President Trump’s moderated tone on Iran eased fears of an imminent military strike, and as weaker-than-expected jobs data hit the demand outlook.
- Yen Gains on Heightened Intervention Warnings: The Japanese yen is strengthening as officials explicitly mention the possibility of joint U.S.-Japan intervention to support the currency.
- Supreme Court Delays Tariff Ruling Again: The Supreme Court once again did not issue a verdict on President Trump’s tariffs, delaying a major potential market catalyst.
- Market Breadth Continues to Improve: Key indicators of market breadth are strengthening, with 67% of S&P 500 stocks now trading above their 200-day moving average, a bullish sign.
- Bitcoin Slips as Crypto Bill Stalls: The crypto market saw a modest pullback towards $95,000 after a key U.S. crypto regulation bill was delayed in the Senate.
Market Overview
After a few days of profit-taking, the bulls came roaring back on Thursday. The catalyst was a much-needed dose of good news from the heart of the technology sector. A spectacular earnings report from Taiwan Semiconductor, the world’s most important chipmaker, was exactly what the market needed to hear. The company’s massive beat and even bigger capex guidance for the next three years served as a powerful validation of the AI investment supercycle, sending a wave of buying through the entire semiconductor ecosystem. This micro-level good news was amplified by a supportive macro backdrop. A fresh batch of U.S. economic data, including a surprise drop in weekly jobless claims to a three-year low, painted a picture of a resilient economy with a cooling labor market, the perfect cocktail for a “soft landing” and a dovish Federal Reserve.
| Index | Up/Down | % | Last |
| DJ Industrials | 292.75 | 0.60% | 49,442 |
| S&P 500 | 17.9 | 0.26% | 6,944 |
| Nasdaq | 58.27 | 0.25% | 23,530 |
| Russell 2000 | 22.93 | 0.86% | 2,674 |
This has kept rate cut expectations high and is providing a powerful tailwind for risk assets, particularly interest-rate sensitive small caps, which surged to another all-time high. While geopolitical risks and the looming Supreme Court tariff decision remain sources of uncertainty, the market’s focus for now is squarely on the powerful combination of a resilient economy, a dovish Fed, and the transformative potential of the AI boom.
Economic Calendar
The calendar is light on Friday, with the market’s focus on digesting the week’s events. Data Released Yesterday / Overnight:
- U.S. Weekly Jobless Claims: Unexpectedly fell to 198,000, their lowest level since 2022, a sign of ongoing resilience in the labor market.
- U.S. Philadelphia Fed & NY Empire State Surveys (Jan): Both showed significant improvements, beating forecasts and pointing to a rebound in regional factory activity.
- Philadelphia Fed Business Index (Jan): Surged to +12.6, crushing the -1.0 consensus.
- NY Fed Empire State Manufacturing Index (Jan): Also beat estimates, rising to +7.7.
- U.S. Mortgage Rates: 30-year fixed-rate mortgages fell to 6.06%, their lowest level in about three years.
Today’s Economic Calendar:
- European Session: An extremely light calendar with only final German CPI data released.
- U.S. Session: The U.S. data calendar is empty, with investors likely to consolidate positions ahead of the weekend.
- A heavy slate of Fed and ECB speakers.
Asset Class Spotlight: FX, Commodities, Bonds & Crypto
After their recent explosive rally, precious metals saw some significant profit-taking. Gold futures fell -0.26% to settle at $4,623.70, while silver gained 1.05%, but both were well off their recent record highs. The pullback was driven by a stronger U.S. dollar and an easing of geopolitical tensions after President Trump’s moderated tone on Iran. Silver experienced a sharp decline, falling over 2% to near $90.40 an ounce and pulling back from its fresh all-time high of near $93.90 set on Wednesday.
The retreat was amplified by news that President Trump had ordered his administration to defer tariffs on critical minerals, which includes silver. This move, combined with the broader improvement in risk appetite and fading geopolitical fears, triggered a wave of profit-taking in the white metal. The big story in commodities is the dramatic reversal in Oil, which has plunged over 4.5% after President Trump’s comments eased fears of a U.S. strike on Iran. Crude oil prices also plunged, with WTI tumbling over 4.5% after the de-escalation headlines and a bearish inventory report.
| Asset | Up/Down | Unit / % Change | Last |
| WTI Crude | -2.83 | -4.56% | 59.19 |
| Gold | -12 | -0.26% | 4,623.70 |
| Silver | 0.96 | 1.05% | 92.35 |
| EUR/USD | -0.003 | -0.26% | 1.1613 |
| USD/JPY | 0.11 | 0.07% | 158.54 |
| 10-Year Note Yield | 0.012 | 0.29% | 4.15% |
The U.S. dollar firmed on the back of the strong U.S. data, which tempered some of the market’s more aggressive rate-cut expectations.
- EUR/USD: The pair has fallen to a new yearly low below 1.1600, pressured by broad U.S. dollar strength and a resilient U.S. economy that is reinforcing the policy divergence with the ECB. A large $1.0B options expiry at the 1.1600 level provides a major support level.
- GBP/USD: The pound is trading on the back foot, slipping below 1.3400 as the dollar gains and a repricing of Bank of England rate cut expectations weigh on the currency. While the UK economy is showing some signs of life, the market remains focused on the relative strength of the U.S. economy.
- USD/JPY: The yen has found some support as Japanese officials have escalated their verbal intervention, with the Finance Minister now explicitly mentioning the possibility of joint U.S.-Japan action. This, combined with a Reuters report suggesting some BoJ members see scope for an earlier rate hike in April, has helped to cap the pair’s upside near the 158.00 level. A massive $2.1B options expiry at the 158.00 level is a key resistance point.
Cryptocurrencies: The crypto market saw a modest pullback after a strong recovery earlier in the week. Bitcoin slipped after U.S. lawmakers delayed a key crypto regulation bill. The market remains in a consolidation phase, with sentiment still fragile after the recent sharp sell-off. U.S. Treasury yields were slightly higher as the market digested the mixed bag of economic data. The benchmark 10-year yield held steady, reflecting ongoing uncertainty about the Fed’s future policy path.
Looking Ahead
With a light data calendar to end the week, the market will likely focus on consolidating the significant moves seen over the past few days. The key question for traders is whether the bullish momentum from TSM’s earnings can be sustained and lead to a broader tech recovery. The market will also be on high alert for the next Supreme Court opinion day, as the tariff ruling remains a major potential catalyst. With geopolitical risks still simmering, traders should remain vigilant for any surprise headlines that could disrupt the market’s fragile calm.
What to Watch Today
- The Yen’s Intervention Risk: The explicit mention of a potential joint U.S.-Japan intervention is a major escalation. With the market on high alert, any sharp, disorderly moves in the Yen could be met with a swift and powerful response.
- The AI Rally’s Resilience: The strong earnings from TSMC have provided a much-needed boost to the tech sector. The market will be watching to see if this is enough to reignite the broader AI rally or if the underlying valuation concerns will reassert themselves.
- Trump’s Tariff Tirade: President Trump’s new tariff threats on AI chips and his warnings about a Supreme Court ruling are a major source of uncertainty. Any new social media posts or official announcements could trigger significant volatility.
- The Precious Metals Parabola: The moves in Gold and Silver are historic but are also becoming extremely extended. The violent reversal in silver is a major warning sign. While the underlying fundamentals are strong, the risk of a sharp, violent pullback on profit-taking is very high.