Stock Market Update

[BRIEFING.COM] The S&P 500 (+0.7%), Nasdaq Composite (+0.8%), and DJIA (+0.7%) are trading higher early this afternoon, advancing on strong leadership from tech names amid broad-based strength.

A stellar earnings report from Taiwan Semiconductor Manufacturing (TSM 347.50, +20.39, +6.23%) provided the catalyst for a rebound in mega-cap and tech names after yesterday's slide, with the top-weighted information technology sector (+1.4%) leading the advance. 

The company saw significant growth in EPS and revenues, while projecting another strong year with revenue growth expected to be "close to 30%" in U.S. dollar terms.

Additionally, the company expects between $52 billion and $56 billion in capital spending for 2026, which investors have taken as a vote of confidence in the AI buildout cycle. 

That optimism contributes to solid gains across peers such as Advanced Micro Devices (AMD 237.16, +13.56, +6.06%) and NVIDIA (NVDA 188.47, +5.33, +2.91%), with the PHLX Semiconductor Index (+3.5%) charting fresh record highs as a result. KLA Corporation (KLAC 1565.77, +131.27, +9.15%) and Applied Materials (AMAT 326.50, +24.62, +8.15%) are among the best-performing S&P 500 names after receiving brokerage upgrades this morning. 

The financials sector (+0.7%) is another beneficiary from this morning's slate of earnings reports. Major banks Morgan Stanley (MS 191.54, +10.76, +5.95%) and Goldman Sachs (GS 976.12, +43.44, +4.66%) both easily topped earnings estimates, with asset manager BlackRock (BLK 1149.94, +58.09, +5.32%) adding to the earnings strength. Additionally, several banking names, including Citigroup (C 117.14, +4.74, +4.21%) and Bank of America (BAC 52.82, +0.34, +0.66%), which fell yesterday despite beating earnings amid broader sector weakness, are paring losses today.

After a couple of forgettable midweek sessions, cyclical sectors seem to be regaining their footing today, with the industrials (+1.0%), consumer discretionary (+0.5%), and materials (+0.5%) sectors also contributing to strength. 

Even the energy sector (-0.2%) has shrugged off the bulk of its early losses despite the price of oil falling $2.92 (-4.7%) to $58.96 per barrel. 

True to the early 2026 form, the Russell 2000 (+1.3%) and S&P Mid Cap 400 (+1.5%) are outperforming once again alongside the growth in cyclicals.

A surprise dip in initial jobless claims (198K; Briefing.com consensus: 210K) corroborates the market's low-hiring, low-firing narrative. While a stronger-than-expected labor market likely keeps the Fed's next rate cut at bay, it reinforces the view of a strong economy in 2026 that is conducive to outperformance in small-cap and cyclical stocks.

Weakness today is largely concentrated in the health care sector (-0.7%), though that weakness is largely attributed to several stock-specific developments, as a majority of the sector's components actually trade higher. 

Eli Lilly (LLY 1035.43, -37.86, -3.53%) provides weak leadership after Reuters reported the FDA has delayed its approval decision of the company's weight loss pill to April 10. 

Boston Scientific (BSX 89.88, -3.86, -4.12%) is the sector's worst performer, trading sharply lower today following the announcement of its agreement to acquire Penumbra (PEN 351.48, +38.04, +12.14%) in a deal valued at approximately $14.5 billion. While Penumbra shares have surged on the news, they remain below the implied takeout price, reflecting investor caution regarding the deal's valuation and the subsequent drop in BSX's stock price.

Elsewhere, the communication services sector (-0.3%) rounds out the three retreating S&P 500 sectors as Alphabet (GOOG 332.84, -3.47, -1.03%) is a "magnificent seven" laggard today. 

So far, today's gains have lifted the major averages back to their unchanged week-to-date levels after a midweek slide. Taiwan Semi's optimistic earnings report has reinvigorated the AI trade this week, while solid bank earnings and economic data contribute to the broadening of leadership into cyclical and small-cap pockets. 

Reviewing today's data:

• Weekly Initial Claims 198K (Briefing.com consensus 210K); Prior was revised to 207K from 208K, Weekly Continuing Claims 1.884 mln; Prior was revised to 1.903 mln from 1.914 mln
  • The key takeaway from the report is that it corroborates a low firing-low hiring environment that will keep the Fed on watch but also on hold in terms of a rate cut this month and possibly until June, which is when the fed funds futures market is projecting the first cut in 2026.
• January Philadelphia Fed Index 12.6 (Briefing.com consensus -5.0); Prior was revised to -8.8 from -10.2
• November Import Prices 0.4%; Prior 0.1%
• November Import Prices ex-oil 0.6%; Prior 0.1%
• November Export Priices 0.5%; Prior 0.0%
• November Export Prices ex-ag. 0.4%; Prior 0.0%
• January Empire State Manufacturing 7.7 (Briefing.com consensus 1.0); Prior was revised to -3.7 from -3.9