S&P 500 and Nasdaq 100 Update: Strong Earnings Drive Market Gains

S&P 500 and Nasdaq 100 update, the S&P 500 and Nasdaq 100 index have shown notable resilience and upward momentum recently, primarily fueled by robust earnings reports from key companies.

TSMC's impressive fourth-quarter earnings and optimistic outlook for 2025 have positively influenced market sentiment, leading to gains in semiconductor stocks such as Nvidia. Overall, corporate profits remain robust, with a significant percentage of S&P 500 companies exceeding earnings expectations.

TSMC's Impressive Financial Performance

Fourth-Quarter Highlights
In its latest earnings report, TSMC revealed a remarkable 38.8% growth in revenue, reaching NT$868.46 billion, surpassing the anticipated NT$850.08 billion. In U.S. dollar terms, revenue hit $26.4 billion, slightly above the company’s forecast range of $26.1 to $26.9 billion. Additionally, TSMC's net income soared 57% to a record NT$374.68 billion, with earnings per share at NT$14.45, exceeding analysts' predictions of NT$366.61 billion.

Positive 2025 Forecast
TSMC's outlook for 2025 also exceeded market expectations, alleviating concerns about a potential decline in AI spending. Chief Financial Officer Wendell Huang noted, “Moving into the first quarter of 2025, we expect our business to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand.” The company's anticipated capital expenditures are expected to rise by up to 19%, further reinforcing confidence in sustained demand.

Impact on Chip Stocks
Following TSMC's earnings report, the stock surged by 3.76%, which positively affected other chip manufacturers. Nvidia, in particular, saw its shares rise approximately 3.3%, benefiting from the overall market optimism surrounding semiconductor demand.

Strong Earnings Season

Bank Performance
The earnings season has kicked off strongly, with major banks reporting better-than-expected results. Of the 28 S&P 500 companies that have reported fourth-quarter earnings as of Wednesday, 82.1% have surpassed estimates. Notably, Bank of America and Morgan Stanley also reported strong earnings, contributing to the positive atmosphere in the market.

Bank of America announced adjusted earnings of 82 cents per share, exceeding analyst expectations of 77 cents. Meanwhile, Morgan Stanley’s profits surged in the fourth quarter, driven by an increase in deals and stock sales, pushing its yearly revenue to a record high. Shares of Bank of America rose by 2.7% in premarket trading following its earnings announcement.

Upcoming Earnings and Market Outlook

Looking ahead, the earnings releases will continue next week, with Netflix set to report after the market closes on Tuesday, January 21, 2025. This will follow the inauguration of Donald Trump as U.S. President, which could lead to significant market movements as his administration is expected to implement impactful policies.

The next ten days will be critical for the markets, as investors anticipate potential changes that could affect U.S. equities.

Technical Analysis of the S&P 500

From a technical perspective, the S&P 500 is currently in a bearish trend on the daily timeframe. The swing high from January 6 remains significant, with a daily close above the 5981 handle needed to signal a potential change in market structure.

Support and Resistance Levels
If the S&P 500 fails to close above this level, it may face further downside risks. Immediate support is identified at 5910, with additional confluence support in the range of 5828-5835, which also coincides with the 100-day moving average. Further supports are located at 5757 and 5668.

Should the S&P 500 manage to close above the 5981 level, targets would shift to 6025 and the all-time high around 6094.

Summary of Key Levels
Support Levels: 5910, 5828, 5757
Resistance Levels: 6000, 6025, 6094

Conclusion

In summary, TSMC's strong earnings and positive forecast for 2025 have significantly lifted market sentiment, especially for chip stocks like Nvidia. As the earnings season progresses and major banks report strong performances, investors are optimistic about the overall market outlook. However, attention will need to be paid to upcoming earnings and potential policy changes from the new administration, as these factors could have substantial impacts on U.S. equities moving forward.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.