Chipmakers and tech giants lift stocks after recent declines

Major US stock indexes rebounded on Thursday, led by gains in semiconductor and mega-cap technology shares, as investors searched for indications of potential Fed rate cuts while weighing mixed corporate results.

The S&P 500 rose 0.5% and the Nasdaq jumped 1.1%, recovering some losses after closing lower the previous two days. Providing a boost were chipmakers and big tech stalwarts like Microsoft and Amazon, which climbed 1-3%.

Taiwan Semiconductor Manufacturing shares surged 8.2% following a strong 2024 revenue growth forecast driven by robust demand for AI application chips. Nvidia, Microchip, Marvell and Advanced Micro Devices also posted gains.

Apple shares increased 2.1% after Bank of America upgraded the iPhone maker’s stock to “buy”, representing its first rating upgrade this year. The rally in mega-cap tech and chips pushed information technology and healthcare sectors higher.

However, signs of persistent economic strength tempered hopes for near-term rate cuts. Jobless claims sank to a late-2022 low, pointing to potential January job increases. Single-family homebuilding declined in December but remains supported by low housing supply.

The Fed is trying to rein in inflation without triggering an economic pullback. Traders now see just a 60% probability of a March rate cut, down from over 80% a month prior. Comments from Fed voter Raphael Bostic will be monitored later Thursday.