US midday market brief: Dow gains over 400 points as investors rotate to blue chips

The Dow Jones Industrial Average surged 426 points, or 0.9%, on Thursday as Wall Street rediscovered its appetite for large-cap stocks.

The S&P 500 climbed 0.7% while the Nasdaq advanced 0.9%, signaling a broad market rebound driven by a resurgence in semiconductor stocks and unexpectedly strong bank earnings.

The rally marked a decisive pivot from earlier-week headwinds tied to geopolitical tensions and Federal Reserve concerns, underscoring how quickly investor sentiment can shift when earnings and economic data support risk appetite.​

Chip sector leads after Taiwan semi’s bullish 2026 capex plan

Taiwan Semiconductor Manufacturing Company delivered a blockbuster earnings report that reset the narrative around artificial intelligence demand.

The company posted fourth-quarter revenues of $33.1 billion, up 20.5% year-over-year, and announced a staggering 2026 capital expenditure budget of $52 billion to $56 billion, a 37% increase from 2025’s $40.9 billion spending.

The upside surprise was unmistakable.

Markets had expected capex closer to $48–$50 billion, so TSMC’s aggressive commitment signaled unwavering confidence in sustained demand for AI chip-making capacity.​

For investors, the number matters enormously. When TSMC commits to massive capex, it cascades through the supply chain.

Equipment makers like ASML, Applied Materials, and semiconductor design firms benefit from the orders required to build out fabs.

TSMC shares jumped more than 6%, while the VanEck Semiconductor ETF (SMH) climbed 3.34% in pre-market trading.

NVIDIA and AMD each gained more than 2%. The message was clear: the AI boom isn’t showing signs of weakening, and the need for advanced chip capacity will be sustained for years.​

Banks climb, and oil pullback adds momentum

Meanwhile, Wall Street’s biggest investment banks delivered a one-two punch.

Goldman Sachs reported a 12% profit increase to $4.62 billion in net income, with deal-making fees surging 25% year-over-year.

Morgan Stanley topped expectations with a 18% profit jump to $4.4 billion, powered by a 47% revenue surge in investment banking, evidence that corporate mergers and acquisitions activity remains robust.

Both stocks climbed sharply, with Goldman advancing 4% and Morgan Stanley nearly 6%, each reaching fresh 52-week highs.​

The rotation into blue chips received additional support from labor market confirmation and energy relief.

Weekly jobless claims came in at 198,000 for the week ending January 10, beating expectations of 215,000 and signaling labor market resilience without overheating.

Separately, Brent crude oil plummeted more than 4%, to around $63.69 per barrel, after President Trump signaled a pause on potential military action against Iran, easing fears of a Middle East supply disruption.

Lower oil prices reduce inflation pressure on the broader economy, a development that tends to lift cyclical and financial stocks.​

The combination of TSMC’s capex confidence, bank earnings resilience, and improving economic signals sets up favorable conditions for a sustained rally if momentum holds.

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