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

• TSMC announced a massive $52-56 billion capex budget for 2026, up 37% from 2025's $40.9 billion, signaling sustained confidence in AI chip demand and exceeding market expectations of $48-50 billion
• Goldman Sachs and Morgan Stanley reported strong earnings with investment banking revenue surging 25% and 47% respectively, pushing both stocks to 52-week highs as M&A activity remains robust
• Weekly jobless claims beat expectations at 198,000 versus 215,000 expected, while Brent crude fell over 4% to $63.69 per barrel, reducing inflation pressures and supporting cyclical stocks

Market Summary: US Equities Rally on Chip Optimism and Bank Earnings

Market Performance:

The Dow Jones surged 426 points (+0.9%) on Thursday, with the S&P 500 up 0.7% and Nasdaq advancing 0.9%, driven by strong semiconductor momentum and robust bank earnings.

Key Catalyst - TSMC:

Taiwan Semiconductor Manufacturing Company (TSMC) delivered exceptional Q4 results with revenues of $33.1 billion (up 20.5% YoY). The chipmaker announced a massive 2026 capital expenditure budget of $52-56 billion, representing a 37% increase from 2025's $40.9 billion. This exceeded market expectations of $48-50 billion, signaling sustained confidence in AI chip demand. The announcement benefits the entire semiconductor supply chain, including equipment makers like ASML and Applied Materials.

Banking Sector Strength:

Goldman Sachs and Morgan Stanley exceeded expectations, demonstrating robust M&A activity. Goldman Sachs reported deal-making fees surging 25% year-over-year, while Morgan Stanley posted an 18% profit jump to $4.4 billion, with investment banking revenue up 47%. Both stocks rallied significantly, with Goldman advancing 4% and Morgan Stanley climbing nearly 6%, each hitting fresh 52-week highs.

Economic Data:

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

Energy Market Relief:

Brent crude oil dropped over 4% to approximately $63.69 per barrel after President Trump signaled a pause on potential military action against Iran, easing Middle East supply concerns and reducing inflation pressures.

Market Implications:

The combination of aggressive AI infrastructure investment, strong bank earnings, solid employment data, and lower oil prices creates favorable conditions for a sustained equity rally, particularly benefiting blue-chip and cyclical stocks.