Earnings strength is broadening beyond the Magnificent 7
On a Thursday morning caught between recovery and doubt, American markets found themselves navigating the familiar tension between strong economic fundamentals and the unresolved weight of trade policy. Semiconductor giants Taiwan Semiconductor and ASML posted earnings that defied the previous day's tariff-driven selloff, while labor market data and regional manufacturing indices quietly affirmed that the broader economy had not lost its footing. Yet the Supreme Court's delayed ruling on tariff legality left investors in a kind of informed suspense — aware of the strength beneath them, uncertain of the policy terrain ahead. It is the condition of modern markets: clarity in the data, ambiguity in the law.
- Wednesday's 1% Nasdaq drop — triggered by fears of a 25% semiconductor tariff — set a nervous tone that Thursday's session was forced to answer.
- Taiwan Semiconductor's 35% profit surge and ASML crossing a $500 billion valuation gave the chip sector a reason to rally, with Applied Materials jumping 6% on a dramatic analyst upgrade.
- Jobless claims falling to 198,000 against a forecast of 215,000 and manufacturing gauges climbing in the Northeast signaled that the real economy was holding steadier than the headlines suggested.
- Goldman Sachs beat earnings expectations handily but still fell nearly 2% — a sharp reminder that markets punish narrative mismatches even when the numbers are good.
- With the Fed almost certain to hold rates steady and the Supreme Court's tariff ruling still pending, the session closed its books not on resolution, but on a carefully managed uncertainty.
Thursday's market opened in the ambiguous space between recovery and hesitation. Futures drifted in small increments after Wednesday's Nasdaq decline — a 1% drop sparked by reports of a proposed 25% tariff on semiconductor imports. What followed was a morning of competing signals, each one nudging the needle without fully settling the question.
The economic data leaned constructive. Jobless claims came in at 198,000, well below the 215,000 forecast, reaffirming a labor market that continues to support consumer spending without tipping into inflationary overheating. Manufacturing activity in the Northeast also improved, with both the Empire State and Philadelphia Fed indices climbing into positive territory. Import prices rose modestly, keeping inflation on the radar without raising alarms.
The semiconductor sector, which had absorbed Wednesday's blow, staged a meaningful rebound. Taiwan Semiconductor reported its seventh consecutive quarter of double-digit profit growth — a 35% surge that sent shares up 4.46%. ASML crossed a $500 billion market cap, rising nearly 5%. Applied Materials jumped 6% after an analyst more than doubled its price target. The message from investors was clear: tariff fears had not erased their conviction in the long-term chip demand story.
Elsewhere, Goldman Sachs beat earnings estimates by a wide margin but fell on lighter-than-expected revenue, illustrating how markets punish even strong performers when the narrative doesn't fully cohere. Amazon gained modestly after announcing a €7.8 billion European cloud investment. Calavo Growers surged on an acquisition offer that gave its weak quarterly results a floor to stand on.
The Federal Reserve was expected to hold rates steady with near-certainty, and BlackRock maintained its overweight stance on U.S. equities, pointing to broadening earnings strength and the transformative pull of artificial intelligence. But the firm flagged wage acceleration as a risk that could delay rate cuts if inflation proved stickier than hoped.
Overhanging everything was the Supreme Court's delayed ruling on the legal framework governing tariffs. Whether the semiconductor levy would hold, expand, or be struck down remained unanswered. That open question — policy uncertainty in its most suspended form — shadowed even the day's most encouraging data, a reminder that markets can read the economy clearly and still not know what comes next.
The market opened Thursday in a state of productive uncertainty. Stock futures were drifting between small gains and small losses, the kind of morning that feels like it could tip either way. The previous day had been rough—the Nasdaq Composite had dropped 1 percent on Wednesday, spooked by reports of a 25 percent tariff on certain semiconductor imports. But Thursday brought fresh economic data that suggested the underlying machinery of the American economy was still grinding forward.
Jobless claims fell to 198,000, beating forecasts by a meaningful margin. The expectation had been 215,000. That gap matters because it signals something the market watches obsessively: whether companies are still hiring, whether the labor market remains tight enough to support consumer spending without overheating into wage-driven inflation. Manufacturing activity in the Northeast also turned a corner. The Empire State index climbed to 7.7, and the Philadelphia Fed's gauge jumped to 12.6, a four-month high. These weren't explosive numbers, but they were moving in the right direction after a period of softness. Import prices had risen 0.4 percent over the two months ending in November, a data point that kept inflation on the agenda but didn't scream alarm.
The semiconductor sector, which had taken the hit on Wednesday, began to recover. Taiwan Semiconductor Manufacturing reported a 35 percent surge in fourth-quarter profit, reaching 505.7 billion Taiwan dollars—roughly $16 billion—and marking the company's seventh consecutive quarter of double-digit growth. The stock climbed 4.46 percent. ASML Holding, the Dutch equipment maker that supplies the tools for chip production, rose 4.93 percent and crossed a $500 billion market valuation. Applied Materials, another critical player in the semiconductor supply chain, jumped 6 percent after an analyst upgrade that raised the price target from $180 to $400. These moves suggested that despite the tariff headlines, investors still believed in the long-term demand for chips and the companies that make them.
The broader market indices showed the tension. The SPDR S&P 500 ETF Trust, which tracks the S&P 500, was up 0.40 percent in premarket trading at $693.13. The Invesco QQQ Trust, which follows the Nasdaq 100, advanced 0.91 percent to $625.16. Goldman Sachs reported earnings of $14.01 per share, beating expectations of $11.65, though revenue came in slightly light at $13.45 billion against a forecast of $13.79 billion. The stock fell 1.79 percent anyway, a reminder that even good earnings can disappoint if the revenue story doesn't match the narrative.
Amazon announced a €7.8 billion investment in a new European Sovereign Cloud for AWS, and the stock edged up 0.67 percent. Calavo Growers surged 12.93 percent after Mission Produce announced plans to acquire it at $27 per share, even though Calavo had posted weak fourth-quarter results. The deal gave the stock a floor and a reason to move.
The bond market was pricing in stability. The 10-year Treasury yielded 4.15 percent, the two-year 3.52 percent. The CME Group's FedWatch tool showed markets assigning a 95 percent probability that the Federal Reserve would leave interest rates unchanged at its January meeting. That's not quite certainty, but it's close. BlackRock, in its market outlook, maintained an overweight stance on U.S. equities, citing solid economic growth and the transformative potential of artificial intelligence. The firm noted that earnings strength was broadening beyond the Magnificent 7 tech stocks into other sectors—a sign that the recovery had legs. But the firm also flagged a risk: if wage gains accelerated, sticky inflation could return and force the Fed to delay rate cuts.
Tariff uncertainty remained the unresolved tension. The Supreme Court had delayed its ruling on the legal framework for tariffs, leaving investors in a state of suspended animation. Would the 25 percent semiconductor tariff stick? Would it expand? Would it be challenged? No one knew. That ambiguity hung over the semiconductor rally, a reminder that even strong earnings and positive economic data can't fully erase the weight of policy uncertainty. Crude oil futures were down 3.36 percent to around $59.75 per barrel. Bitcoin was up 2.05 percent at $96,927. Asian markets closed mixed; European markets were mixed in early trade. The world was waiting to see which way Thursday would finally break.
Citas Notables
U.S. corporate earnings strength is broadening, meaning profit growth previously concentrated in the Magnificent 7 is now extending to other sectors.— BlackRock
Renewed wage gains could signal sticky inflation that will curb how soon the Fed might cut rates again.— BlackRock
La Conversación del Hearth Otra perspectiva de la historia
Why did the semiconductor stocks rally so hard if the tariff threat is real?
Because the earnings were genuinely strong—Taiwan Semiconductor's profit jumped 35 percent, and that's seven quarters in a row of double-digit growth. The market is saying: yes, tariffs are a risk, but the underlying demand for chips is real and growing. The threat is real, but so is the business.
But doesn't the tariff uncertainty make those gains fragile?
Absolutely. The Supreme Court delayed its ruling, so nobody knows if that 25 percent tariff actually becomes law or gets struck down. It's like the market is betting on the earnings while hedging against the policy. That's why you see the gains but also the caution.
What does the labor market data actually tell us?
That companies are still hiring, but carefully. Jobless claims fell to 198,000, which is tighter than expected. It means people still have jobs, they're still spending, but employers aren't desperate to hire. It's what BlackRock called a "no hiring, no firing" stasis—stable enough to support consumption without the wage pressure that would force the Fed to keep rates high.
Is that good or bad?
It's the Goldilocks scenario—good enough to keep the economy moving, not so hot that inflation roars back. The risk is if wages start rising again. That's when the Fed gets nervous about cutting rates.
So the Fed is probably holding rates steady in January?
The market is pricing it at 95 percent probability. That's not quite certain, but it's close. The Fed has room to wait and see how inflation and the labor market actually evolve.
What's BlackRock's bet?
They're overweight on U.S. equities and bullish on AI. They think corporate earnings are broadening beyond the big tech names into other sectors—that's a healthier market. But they're watching wages like a hawk. If those start accelerating, the whole calculus changes.