General Market News

The White House confirmed that the U.S. Commerce Department's 25% tariff on certain high-end semiconductors is a 'phase one' national security action, with additional measures potentially coming based on negotiations with other countries and companies. President Trump has previously threatened tariffs as high as 100% on chips not manufactured in the U.S. as part of efforts to expand domestic semiconductor production.

• The 25% tariff on high-end semiconductors is described as an initial step in a broader strategy to protect the domestic chip sector
• Trump has previously threatened 100% tariffs on chips not made in the U.S., signaling potential for more aggressive trade measures
• Future tariff announcements will depend on ongoing negotiations with foreign countries and semiconductor companies

U.S. corporate bond issuance is projected to reach $2.46 trillion in 2026, an 11.8% increase from 2025, with AI hyperscalers emerging as the primary driver. The five major hyperscalers (Amazon, Alphabet, Meta, Microsoft, Oracle) are expected to borrow approximately $140 billion annually over the next three years, potentially exceeding $300 billion. This surge in AI-related borrowing reflects massive capital expenditure needs for data center expansion and processor infrastructure.

• Net issuance is forecast to rise 30.2% to $945 billion in 2026, with hyperscalers issuing $121 billion in 2025 compared to an average of just $28 billion annually from 2020-2024
• The Big Five hyperscalers are expected to match or exceed the Big Six banks' projected $157 billion annual issuance, making them among the largest issuers in the investment-grade index
• Increased hyperscaler borrowing has widened credit spreads and driven investors toward credit default swaps for hedging, with Oracle's five-year CDS costs more than tripling since its $12 billion September 2025 bond sale

The Federal Reserve's January 2026 Beige Book reports modest economic growth across most districts, driven by resilient but selective consumer spending concentrated among higher-income households. Businesses face ongoing cost pressures from tariffs and are cautious about passing increases to price-sensitive consumers, while labor markets show stability with underlying job-security concerns.

• Holiday spending was stronger but uneven: higher-income consumers drove discretionary and experiential purchases, while lower- and moderate-income households cut back on nonessential items
• Businesses reported tariff-related cost pressures but limited ability to raise prices, instead focusing on selective increases, promotions, and cost controls to protect margins without dampening demand
• Labor markets remain stable with little net hiring growth, but job-security sentiment among hourly and lower-income workers fell 6.7 points month-over-month, indicating fragile confidence beneath employment headlines

Goldman Sachs CEO David Solomon predicts 2026 will be a blockbuster year for mergers and acquisitions, citing a more favorable regulatory environment under the Trump administration, Fed rate cuts, and strong CEO appetite for deals. Goldman earned a record $9.3 billion in investment banking fees in 2025, up 21% year-over-year, while global M&A volumes surged 42% to $5.1 trillion.

• Goldman Sachs and five other major US lenders generated combined revenue of $593 billion in 2025 (up 6%) with $157 billion in profits (up 8%), setting the stage for substantial banker bonuses.
• Goldman's deal pipeline is at its highest level in four years, having advised on $1.48 trillion in M&A volume including major deals like the $56.5 billion Electronic Arts LBO and Alphabet's $32 billion Wiz acquisition.
• Solomon criticized the Biden administration's regulatory approach to mega-mergers, suggesting CEOs now see 'a window of a handful of years' for transformative deals under more favorable conditions.

Bank stocks, particularly large money-center banks, significantly outperformed the market in 2025, with IBD's Banks-Money Center group up 47% for the year. Despite strong fourth-quarter earnings from major banks like JPMorgan, Morgan Stanley, and Goldman Sachs, recent stock volatility emerged due to mixed Q4 results and President Trump's proposal to cap credit card interest rates at 10%. The sector enters 2026 well-capitalized with easing regulations and growing loan demand, though faces pressure from fintech competition and potential AI disruption.

• Large banks outpaced regional banks by wide margins, with money-center banks up 47% versus 21% for superregionals in 2025; JPMorgan's market cap rose 31.3% to $886 billion while Morgan Stanley and Goldman Sachs hit record highs after strong Q4 earnings.
• Loan demand rebounded to 5.7% year-over-year growth by end of 2025 from zero in April 2024, while the yield curve steepened with the 10-year/2-year spread widening to 64 basis points, boosting net interest margins.
• Trump's proposed 10% credit card interest rate cap and regulatory rollbacks create mixed pressures, with the administration eliminating 2013 leveraged lending restrictions while threatening traditional credit card revenue streams that could reduce deposit profits by 20% or more if AI agents help consumers optimize rates.

Income ETFs have attracted significant investor interest in recent years, particularly following the 2019 ETF rule that enabled the launch of numerous new income-focused fund offerings. VettaFi's head of research Todd Rosenbluth discussed the outlook for income ETFs heading into 2026. The sector has evolved substantially as investors seek portfolio income solutions through these specialized exchange-traded funds.

• The 2019 ETF rule served as a catalyst for launching 'countless new and intriguing ETF offerings' designed to generate income for investor portfolios
• Income ETFs have become a prominent investment category as investors continue to prioritize income-generating strategies in their portfolios
• VettaFi's research leadership is analyzing the 2026 outlook for this evolving ETF segment amid sustained investor demand

The United States and Taiwan signed a trade agreement Thursday focused on reshoring semiconductor manufacturing, with Taiwanese companies committing at least $250 billion in direct U.S. investment plus $250 billion in credit guarantees. The deal aims to strengthen U.S. supply chains and reverse decades of offshoring in the semiconductor industry.

• Reciprocal U.S. tariffs on Taiwanese goods capped at 15%, with zero tariffs on select items like pharmaceuticals and aircraft components
• Future U.S. semiconductor tariffs will reward Taiwanese companies building production facilities in America with duty-free imports tied to new U.S. manufacturing capacity
• Agreement establishes U.S.-based industrial parks and advances 'America First trade and investment' priorities led by Commerce Secretary Howard Lutnick

IMF Managing Director Kristalina Georgieva voiced strong support for Federal Reserve Chair Jerome Powell and emphasized the critical importance of central bank independence amid a Trump administration investigation into Powell over $2.5 billion renovation cost overruns. The statement comes as Trump publicly dismisses concerns about eroding Fed independence and faces pushback from Senate Republicans, foreign officials, and former U.S. government leaders from both parties.

• Powell is under investigation by the Trump administration for cost overruns on a $2.5 billion Fed headquarters renovation project, which he calls a pretext for pressure to lower interest rates
• Georgieva stated 'the Fed is precious for the Americans' and 'very important for the rest of the world' given the dollar's role as a reserve currency
• Trump dismissed warnings that undermining Fed independence could weaken the dollar and spark inflation, telling Reuters 'I don't care,' while also attempting to fire Fed Governor Lisa Cook in a case headed to the Supreme Court

The Dow Jones surged 426 points (0.9%) on Thursday as investors rotated into large-cap stocks, driven by strong semiconductor and banking earnings. Taiwan Semiconductor's bullish 2026 capital expenditure plan and robust bank earnings from Goldman Sachs and Morgan Stanley fueled the broad market rebound. The rally was further supported by resilient jobs data and falling oil prices after Trump signaled a pause on military action against Iran.

• 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

RBC Capital Markets' head of U.S. equity strategy Lori Calvasina predicts the S&P 500 will reach 7,750 in the next 12 months, representing an 11% gain, driven by continued earnings growth rather than valuation expansion. This outlook is supported by unusually strong fourth-quarter 2025 earnings revisions, with analysts raising estimates from 7.2% to 8.1% growth during the quarter—a rare occurrence that typically signals solid fundamentals.

• Analysts increased Q4 2025 earnings estimates during the quarter itself, marking only the fifth time this has happened since 2021 and signaling stronger-than-expected corporate performance
• RBC's 7,750 price target relies on earnings growth, not multiple expansion, with Calvasina stating the market will 'get what it deserves from an earnings perspective'
• Tech sector companies including Nvidia, Microsoft, and Apple drove the upward earnings revisions, with the sector seeing the biggest jump in earnings per share expectations

President Trump stated Wednesday he has no plans to fire Fed Chairman Jerome Powell despite an ongoing DOJ criminal investigation into over-budget headquarters renovations. This follows reports that Trump had previously offered the Fed chair position to JPMorgan CEO Jamie Dimon, who interpreted it as a joke. Powell's term as chairman ends in May amid heightened political pressure over interest rate policy.

• Trump is considering replacements for Powell including 'two Kevins' (likely Hassett and Warsh), with an announcement expected in the next couple of weeks; Treasury Secretary Scott Bessent has been ruled out
• Powell faces a DOJ probe over Fed headquarters renovations that Trump claims cost $4 billion, about $1.5 billion over budget; Powell called the investigation politically motivated
• Bipartisan lawmakers and foreign central bank leaders have criticized the investigation, warning about threats to Fed independence, but Trump responded 'I don't care' to concerns from critics and lawmakers who must confirm his Fed pick

The Nasdaq 100 and S&P 500 rallied on Thursday, January 15, 2026, recovering from two consecutive days of losses, driven primarily by a surge in semiconductor stocks. Taiwan Semiconductor's record quarterly earnings, showing a 35% profit jump, sparked renewed investor confidence in AI-related chip stocks. The S&P 500 gained 0.52% while the tech-heavy Nasdaq Composite rose 0.75%.

• Taiwan Semiconductor's record quarter ignited chip stock momentum, with Nvidia and AMD up 1.00% and Micron up 3.00%; President Trump's 25% tariff on certain semiconductors also boosted the sector
• Banking stocks contributed to the rally with Morgan Stanley jumping over 3% and Goldman Sachs gaining 2% after beating fourth-quarter earnings estimates
• Energy sector declined 1.50% as crude oil prices fell on easing Iran tensions following Trump's remarks, with Exxon Mobil dropping 0.66% after a 3% gain the previous session

US stocks rebounded on Thursday with the Nasdaq up 0.9% and S&P 500 gaining 0.6%, led by semiconductor stocks recovering from recent losses. The rally followed volatile sessions earlier in the week driven by concerns over trade policy and China-related pressures on chipmakers like Nvidia. Positive economic data and strong earnings from Taiwan Semiconductor and Morgan Stanley helped restore investor confidence.

• Taiwan Semiconductor jumped 4% after reporting 35% profit growth, lifting other chipmakers including Nvidia (+2%), AMD (+4%), and Micron (+2%) despite earlier concerns over Trump's 25% semiconductor tariff
• Initial jobless claims fell to 198,000, beating estimates of 215,000 and marking the lowest four-week average since January 2024, while manufacturing indices from New York Fed and Philadelphia Fed significantly exceeded forecasts
• The semiconductor tariff includes exemptions for chips supporting US technology supply chain buildout, which investors viewed positively as protecting critical AI and tech infrastructure investments

Initial US unemployment claims fell to 198,000 in the week ending January 10, down 9,000 from the prior week and below the 215,000 forecast. The decline indicates layoffs remain historically low as employers continue to retain workers despite broader labor market cooling. However, hiring has slowed considerably amid economic uncertainty and AI investment impacts.

• Claims dropped more than expected to 198,000, though economists caution seasonal adjustment issues around year-end holidays may partly explain the decline
• The US added only 584,000 jobs in 2025, the fewest in five years, averaging 49,000 monthly; December payrolls rose by just 50,000
• The Fed's Beige Book reported employment 'mostly unchanged' with increased use of temporary workers and hiring focused on backfilling vacancies rather than expansion

Wall Street investment banks reported strong results in 2025, with global investment banking revenues surpassing $100 billion as dealmaking and IPOs rebounded after years of challenges. Major banks including Goldman Sachs and Morgan Stanley posted significant fee increases, with Goldman up 25% and Morgan Stanley up 47%. Bankers expect continued momentum in 2026 with robust pipelines for M&A deals and IPOs, including potential listings from OpenAI, SpaceX, and Cerebras.

• Global investment banking revenues crossed $100 billion in 2025, marking a recovery from years of high interest rates and market volatility
• Major 2025 deals included Electronic Arts' proposed $55 billion take-private (largest LBO if completed) and Union Pacific's $85 billion bid for Norfolk Southern
• JPMorgan earned the highest industry-wide fees in 2025 according to Dealogic, while Wells Fargo climbed to 8th in M&A rankings from 12th, advancing its goal to become a top-five U.S. investment bank

Chicago Federal Reserve President Austan Goolsbee warned that inflation could return forcefully if the central bank's independence is compromised. His comments come amid ongoing discussions about the Fed's autonomy in setting monetary policy. The statement underscores concerns about political interference potentially undermining inflation control efforts.

• Goolsbee emphasized that central bank independence is crucial for maintaining price stability and preventing inflation from 'roaring back'
• The warning comes at a time when the Fed's decision-making authority and independence have been subjects of political debate
• Loss of Fed independence could undermine credibility in monetary policy and weaken the central bank's ability to control inflation effectively

US weekly jobless claims unexpectedly fell by 9,000 to 198,000 for the week ended January 10, below the forecast of 215,000. However, economists attribute the decline to seasonal adjustment challenges rather than a genuine improvement in labor market conditions, which remain stagnant with low layoffs but sluggish hiring.

• The labor market shows little change in dynamics, with the Fed's Beige Book reporting 'employment was mostly unchanged' and firms primarily backfilling vacancies rather than creating new positions
• The economy added only 584,000 jobs in 2025, the fewest in five years, averaging about 49,000 positions per month
• Uncertainty from Trump's trade and immigration policies, combined with heavy AI investment, has reduced both worker demand and supply while prompting increased use of temporary workers for flexibility

Software stocks are underperforming in 2025 as Anthropic's launch of 'Cowork' and OpenAI's enterprise push raise investor concerns about AI companies disrupting traditional software vendors. Major software stocks including Salesforce, ServiceNow, Atlassian, and Snowflake have declined significantly, with losses ranging from 6% to 18% year-to-date. Analysts debate whether the selloff reflects genuine disruption risk or overblown sentiment.

• Anthropic's Cowork automates knowledge worker tasks independently, targeting functions currently served by collaboration and productivity software companies, intensifying competitive threats from AI labs
• Software stocks have struggled despite favorable macro conditions (tamer inflation data), as companies fail to generate meaningful AI-related revenue and face risks to 'per seat' licensing models if AI eliminates jobs
• Analysts like William Blair's Bhatia argue fears are 'overstated' and disruption will mainly affect point solutions rather than mission-critical enterprise systems, though RBC warns headline risk may persist throughout 2025

U.S. markets experienced a sector rotation on Wednesday as investors moved from expensive tech stocks into value names, with the 'Magnificent 7' megacaps declining. However, TSMC's blockbuster earnings on Thursday, showing a 35% profit jump and strong AI-driven revenue forecasts, may stabilize sentiment. Oil and gold prices also retreated after President Trump suggested Iran tensions might ease.

• TSMC reported record Q4 profit up 35% and expects nearly 30% revenue growth in 2026, citing the 'AI mega trend' as demand driver
• U.S. small-cap stocks continued advancing despite tech selloff, indicating investors remain committed but are becoming more selective in allocations
• Oil prices spiked to a three-month high above $66/barrel on Iran tensions but dropped sharply after Trump's comments, while global supply glut of 2.8 million barrels/day expected in 2026

After years of tech dominance, U.S. stock market leadership is showing signs of broadening to industrials, healthcare, and small-cap companies. Investors are growing wary of expensive tech valuations amid uncertainty over AI returns, while other sectors are expected to show solid profit growth in 2026. The equal-weight S&P 500 has outperformed the standard index since late October, signaling gains beyond heavyweight tech stocks.

• The equal-weight S&P 500 gained over 5% since end of October versus just 1% for the standard index, indicating the average stock is outperforming market-cap weighted heavyweights
• All 11 S&P 500 sectors are expected to show at least 7% earnings growth in 2026, with the 'Magnificent Seven' earnings growth advantage narrowing to 23.5% versus 13% for the rest of the index
• Tech still accounts for one-third of S&P 500 weight and expects over 30% earnings growth in 2026, meaning the sector will likely remain influential even as leadership broadens