S&P 500, Nasdaq set for firm open as chip stocks shine

By Medha Singh and Pranav Kashyap

Jan 15 (Reuters) – The S&P 500 and the Nasdaq were set to open higher on Thursday after TSMC’s blockbuster quarterly results ignited a rally in chipmakers, while investors parsed earnings from Morgan Stanley and Goldman Sachs that capped big banks’ reporting season.

The bounce would follow a two-day slide for the main U.S. stock indexes, with the S&P 500 and the Nasdaq posting their sharpest drops of the year so far on Wednesday.

Chip stocks such as Nvidia rose 1.5%, while Broadcom and Micron gained 2.5% and 3.5%, respectively, in premarket trading on Thursday. Chipmaking tool companies Applied Materials and Lam Research rose 8.3% each, and KLA gained 6.3%.

The world’s main producer of advanced AI chips, TSMC, predicted robust annual growth and flagged more U.S. manufacturing capacity was in the works. U.S.-listed shares of TSMC jumped 5.4%.

BlackRock, the world’s largest asset manager, gained 2.4% after a rally in markets lifted fee income and pushed its assets under management to a record $14.04 trillion in the fourth quarter.

Goldman Sachs and Morgan Stanley both reported a rise in quarterly profit, helped by a flurry of dealmaking. Goldman’s shares, which have surged 63% over the past 12 months, slipped 1.7% after the lender’s results. Morgan Stanley gained 0.7%.

“Some of these (bank stocks) have run up pretty good and even though there’s a bit of mediocre earnings and not a lot of misses, there’s a lot of unknown headwinds here,” said Jason Bottenfield, a wealth manager at Steward Partners.

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%, even as some of the banking giants posted robust profit growth.

At 8:33 a.m. ET, U.S. S&P 500 E-minis were up 32.5 points, or 0.47%, Dow E-minis were down 44 points, or 0.09%, and Nasdaq 100 E-minis were up 250.75 points, or 0.98%.

MARKETS CHURN AS EARNINGS UNDERWAY

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% average growth in quarterly profit from a year ago, according to LSEG IBES data as of January 9.

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 all-time highs this week.

Meanwhile, the Labor Department’s data showed weekly jobless claims rose 198,000 in the week ended January 5, less than economists’ estimates of 215,000. 

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.

(Reporting by Medha Singh and Pranav Kashyap in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)