Morning Market Brief: Semis and banks lead before open

Introduction#

According to Monexa AI, U.S. equities closed higher on Thursday with broad but selective participation: the S&P 500 (^SPX) finished at 6,944.47 (+0.26%), the Dow Jones Industrial Average (^DJI) at 49,442.44 (+0.60%), and the Nasdaq Composite (^IXIC) at 23,530.02 (+0.25%). Volatility eased, with the CBOE Volatility Index (^VIX) at 15.54 (-1.89%). The tape was led by semiconductor-capital equipment and airlines, while energy and crypto‑linked financials lagged. Overnight, policy developments around the U.S.–Taiwan semiconductor framework and Taiwan Semiconductor Manufacturing’s results continued to anchor risk appetite and pre‑open positioning.

The overnight headline set is consequential. The White House released an action imposing an immediate 25% ad valorem tariff on certain advanced computing chips and derivatives, while simultaneously advancing a U.S.–Taiwan arrangement that caps reciprocal tariffs on Taiwanese goods at 15% and ties preferential treatment to on‑shore investments. Complementing this, the U.S. Commerce Department published a fact sheet detailing at least $250 billion in direct U.S. investments and $250 billion in credit guarantees to accelerate domestic semiconductor capacity and cluster development. See the official releases from the White House and the U.S. Department of Commerce, with additional reporting by the Financial Times, the Wall Street Journal, and Bloomberg. These policy steps, together with strong results and capex commentary from Taiwan Semiconductor, continue to support the AI‑hardware investment cycle and the related equity rotation.

Market Overview#

Yesterday’s Close Recap#

The index close and volatility picture, per Monexa AI, are summarized below.

Beneath the calm headline gains, leadership was notably narrow within Technology. Monexa AI’s heatmap shows semiconductor‑equipment names surging—KLA Corp. KLAC (+7.70%), Applied Materials AMAT (+5.69%), and Lam Research LRCX (+4.16%)—alongside a steadier move in Nvidia NVDA (+2.13%). In contrast, select large‑cap software/legacy IT underperformed, with International Business Machines IBM (-3.59%). Communication Services was dragged by Alphabet’s two share classes, Alphabet Class C GOOG (-0.94%) and Alphabet Class A GOOGL (-0.91%), while Meta Platforms META defied the tape (+0.86%).

Financials reflected a clean split: traditional asset‑gatherers and banks rallied with earnings momentum—BlackRock BLK (+5.93%), Morgan Stanley MS (+5.81%), Goldman Sachs GS (+4.63%), and Citigroup C (+4.49%)—whereas crypto‑linked retail platforms fell sharply: Robinhood HOOD (-7.79%) and Coinbase COIN (-6.48%). Energy remained a weak spot at the single‑name level with Devon Energy DVN (-4.23%), ONEOK OKE (-3.30%), and Exxon Mobil XOM (-0.82%), despite strength in Baker Hughes BKR (+4.04%) and First Solar FSLR (+3.04%). Industrials outperformed on travel and freight, with United Airlines UAL (+4.76%) and Delta Air Lines DAL (+4.16%) leading. The drop in ^VIX signals an incremental easing of hedging demand into the long weekend stretch.

Overnight Developments#

Overnight reporting from Tier‑1 outlets kept the spotlight on semiconductors. Taiwan Semiconductor’s earnings and capex outlook reinforced the AI infrastructure buildout narrative, with multiple outlets emphasizing that stronger demand and expanded U.S. investment plans are in motion. For primary documents and coverage, see the White House, U.S. Commerce, the Financial Times, the Wall Street Journal, and Bloomberg. Monexa AI’s news feed also flagged commentary suggesting U.S. tech futures are set up to extend the rally spawned by Taiwan Semiconductor’s beat, even as some Asian and European equity markets eased overnight.

Macro‑political noise remained elevated in headlines, but U.S. equity price action continues to skew toward earnings and AI policy/capex drivers, per Monexa AI’s “cautiously positive / risk‑on tilt” characterization.

Macro Analysis#

Economic Indicators to Watch#

No major economic releases were highlighted in Monexa AI’s overnight feed. In the absence of top‑tier data drops, the opening tone is likely to be set by corporate earnings (notably Financials) and semiconductor policy/capex headlines. For now, the marginal driver of index‑level direction remains AI‑related investment and the durability of bank earnings.

From a policy standpoint, implementation timing matters. The White House action imposes a 25% tariff on specified advanced computing chips effective for imports entered on or after January 15, 2026, with a status update to follow by July 1, 2026. The Commerce framework details preferential tariff treatment linked to U.S. investment, including construction‑phase tariff exemptions up to 2.5x planned capacity and 1.5x post‑construction. These specifics, sourced from the White House and U.S. Commerce, are likely to inform capex timing across foundry, advanced packaging, and equipment vendors.

Global/Geopolitical Factors#

Tier‑1 coverage frames the U.S.–Taiwan arrangement as part of a broader supply‑chain realignment that aims to reshore critical AI‑hardware capabilities and reduce single‑region dependency. The Financial Times and Bloomberg underscore that Europe and South Korea are also advancing domestic capacity, suggesting a multi‑region buildout into 2026. While such efforts mitigate concentrated risk, they do not eliminate geopolitical exposure in the Taiwan Strait; as a result, investors should continue to prize diversified supply chains and multi‑sourced vendor exposure.

Sector Analysis#

Sector Performance Table#

According to Monexa AI’s sector performance snapshot at the close, Utilities and Energy paced gains while Technology and Healthcare underperformed. We flag notable discrepancies between the sector snapshot and Monexa AI’s bottom‑up heatmap (see discussion below).

Monexa AI’s heatmap indicates a different leadership mix: Technology showed a modest gain led by semicap, Industrials outperformed on airlines and logistics, and Utilities rallied on idiosyncratic power names. Conversely, Energy underperformed on upstream and midstream weakness, and Healthcare was mixed with managed care strong but large pharma/biotech weaker. This divergence suggests either classification or timing differences between the sector roll‑up and the stock‑level breadth reads. We prioritize the underlying breadth signals for forward‑looking positioning—semicap, airlines/logistics, and select power names leading—while still noting the official sector snapshot as the recorded close.

Within Technology, the leadership was unambiguous: equipment and materials exposure rallied on AI‑capex momentum. KLA KLAC (+7.70%) and Applied Materials AMAT (+5.69%) saw outsized moves, while Nvidia NVDA added +2.13%. Laggards included IBM IBM (-3.59%) and, within Communication Services, Alphabet’s classes GOOG (-0.94%) and GOOGL (-0.91%), while Meta META advanced +0.86%.

Financials bifurcated as crypto‑linked platforms such as Robinhood HOOD (-7.79%) and Coinbase COIN (-6.48%) fell, even as traditional banks and asset managers rallied—BlackRock BLK (+5.93%), Morgan Stanley MS (+5.81%), Goldman Sachs GS (+4.63%), and Citigroup C (+4.49%)—reflecting strength in investment banking and trading fees.

Energy was mixed‑to‑weak beneath the surface. Devon DVN (-4.23%), ONEOK OKE (-3.30%), and Exxon XOM (-0.82%) weighed on the group, while Baker Hughes BKR (+4.04%) and First Solar FSLR (+3.04%) rose. Utilities showed idiosyncratic strength with Vistra VST (+6.63%), NRG Energy NRG (+5.79%), and Constellation Energy CEG (+3.28%). Industrials benefited from travel and freight demand—United UAL (+4.76%), Delta DAL (+4.16%), and Old Dominion Freight Line ODFL (+2.70%) moved higher.

Consumer‑oriented groups demonstrated the market’s selectivity. In Consumer Cyclical, Amazon AMZN gained +0.65% and restaurants performed well—Darden Restaurants DRI (+3.11%), Starbucks SBUX (+2.34%)—but Nike NKE slipped (-1.49%). Consumer Defensive was stable with Costco COST (+0.61%) and Sysco SYY (+2.68%), while Coca‑Cola KO lagged (-1.34%).

Real Estate and Basic Materials also leaned constructive. American Tower AMT (+2.29%), Public Storage PSA (+1.83%), and CBRE Group CBRE (+3.60%) supported REITs, while steel and construction materials posted gains—Steel Dynamics STLD (+2.52%), Vulcan Materials VMC (+1.08%), and PPG PPG (+1.38%)—offset by specialty chemicals softness at LyondellBasell LYB (-2.15%) and Albemarle ALB (-2.12%).

Company‑Specific Insights#

Earnings and Key Movers#

Investment banks and asset managers set the tone. Goldman Sachs GS reported EPS of $14.01, outpacing a prior estimate of $11.70, with equities trading revenues up +25% to $4.31 billion and FICC up +12% to $3.11 billion. Investment‑banking fees rose +25% to $2.58 billion, according to Monexa AI’s earnings summary. Morgan Stanley MS delivered EPS of $2.68 on revenue of $17.89 billion, with a +47% surge in investment‑banking fees led by M&A and IPOs. These beats align with Monexa AI’s breadth data showing +5–6% stock moves for GS and MS. Together, they reinforce an improving deal cycle into 2026, with operating leverage to underwriting and advisory.

The AI‑hardware complex remained the market’s north star. Taiwan Semiconductor TSM closed +4.44%, per Monexa AI’s quotes, after reporting record Q4 results and signaling elevated capex to meet AI demand. The read‑through has been constructive for U.S. AI beneficiaries including Broadcom AVGO (+0.92%) and infrastructure power/cooling provider Vertiv VRT (+0.98%), the latter receiving a new $200 price target from RBC, implying roughly +13.02% upside. Equipment names—Applied Materials AMAT (+5.69%), Lam Research LRCX (+4.16%), and KLA KLAC (+7.70%)—also captured the policy tailwinds.

In Healthcare, event‑driven dynamics took center stage. Penumbra PEN jumped +11.82% after Boston Scientific BSX agreed to acquire the company for approximately $14.5 billion in a cash‑and‑stock deal that values shares at $374 or 3.87 BSX shares, according to Monexa AI’s corporate actions summary. Elsewhere, large‑cap pharma and biotech traded heavy—Eli Lilly LLY (-3.76%) and Moderna MRNA (-3.01%)—while managed care outperformed, with Humana HUM (+3.58%) and Elevance ELV (+2.44%).

Energy’s dispersion remained wide. Devon Energy DVN fell (-4.23%) even as merger discussions with Coterra have been highlighted in recent commentary tracked by Monexa AI; RBC maintained a “Sector Perform” on DVN. Equipment services were brighter, with Baker Hughes BKR (+4.04%) continuing to display relative strength. In the renewables‑adjacent cohort, First Solar FSLR (+3.04%) outperformed.

Telecom headlines were idiosyncratic. Verizon VZ ended (-1.18%) after offering customer credits to resolve a service outage, according to Monexa AI’s overnight news summary. In EVs, Nio NIO (+1.64%) drew a new price target of $6.10 from Macquarie, implying approximately +31.61% upside from a prior reference price, amid tariff‑related volatility, per Monexa AI’s research feed.

Extended Analysis: Global Overnight Shifts And How They May Drive Today’s Open#

The new U.S.–Taiwan policy architecture matters for capital flows and competitive dynamics. The tariff and investment framework—grounded in the White House action and U.S. Commerce fact sheet—explicitly incentivizes U.S.‑based fabrication and advanced packaging through tariff‑rate caps (15% reciprocally for Taiwanese goods) and significant direct investment and credit guarantees. Construction‑phase and post‑construction tariff exemptions (up to 2.5x and 1.5x planned capacity, respectively) lower the effective cost of scaling U.S. fabs.

For public markets, that translates into a multi‑quarter demand signal for AI‑exposed equipment and infrastructure. Monexa AI’s breadth confirms where that demand is being priced first: equipment makers such as Applied Materials AMAT, Lam Research LRCX, and KLA KLAC led Technology; electrification and data‑center power beneficiaries like Vertiv VRT, Constellation Energy CEG, and Vistra VST outperformed; and core compute leaders such as Nvidia NVDA and Broadcom AVGO remain structurally bid on the capex glidepath.

At the same time, the market is signaling a preference for traditional Financials over speculative fintech/crypto exposure. The strong beats from Goldman Sachs GS and Morgan Stanley MS—backed by fee growth in M&A and equity capital markets—help explain the rotation into banks and asset managers like BlackRock BLK, while Robinhood HOOD and Coinbase COIN slide on crypto‑sensitive flows. This bifurcation is consistent with Monexa AI’s assessment of “cautiously positive / risk‑on tilt” where investors are rewarding tangible cash‑flow generators tied to the deal cycle.

We also note a key data discrepancy investors should respect at the open. Monexa AI’s sector‑level close shows Technology (-1.01%) and Healthcare (-1.12%) on the day, while the stock‑level heatmap shows a modest Tech gain led by semicap and a mixed Healthcare tape with managed care outperforming. Energy’s sector print (+1.02%) conflicts with the heavy declines across large upstream and midstream constituents (e.g., Devon DVN (-4.23%), ONEOK OKE (-3.30%)). Such divergences typically stem from differences in time windows, index composition, or classification methodology used for sector aggregates versus the stock‑level breadth analysis. For actionable positioning, we place more weight on the bottom‑up breadth and the index‑level indices (^SPX, ^DJI, ^IXIC), which all closed higher, as they align with the AI‑capex and bank‑earnings narrative.

In Consumer groups, the data still describe a barbell: rate‑sensitive big‑box and food‑away‑from‑home saw steady demand—Costco COST and Starbucks SBUX—while branded apparel like Nike NKE remains a source of idiosyncratic risk. Real Estate participation via towers and storage (American Tower AMT, Public Storage PSA dovetails with Communications and consumer‑balance‑sheet stability; that said, retail‑oriented REITs like Simon Property SPG (-1.84%) highlight the need for selectivity.

Finally, the vol complex sends a consistent message. The CBOE Volatility Index (^VIX) at 15.54 and the CBOE Russell 2000 Volatility Index (^RVX) at 20.09 both declined, a combination that is typically supportive of early risk deployment and index‑level dips being bought, barring a negative policy headline.

Conclusion#

Morning Recap and Outlook#

The setup into Friday’s open is defined by three verifiable pillars. First, AI hardware remains the decisive macro‑micro bridge: official U.S.–Taiwan policy actions and fresh Taiwan Semiconductor signals are pushing capital toward U.S. fab build‑outs and the surrounding equipment and power ecosystem, with leadership concentrated in semicap, data‑center infrastructure, and select Utilities. Second, bank earnings are re‑accelerating in the fee lines that matter most for equity‑market risk appetite—M&A, IPOs, and equities trading—validating a rotation into traditional Financials despite ongoing category‑specific headwinds for crypto‑linked platforms. Third, the market is being choosy inside sectors: Communication Services split between Alphabet’s modest declines and Meta’s gains; Consumer Cyclical showed restaurants/e‑commerce strength while apparel lagged; Healthcare rewarded managed care but discounted large‑cap pharma/biotech on day‑specific headlines.

Actionable watch‑items for the session follow directly from these datapoints. For Technology, monitor continuation in semicap equipment—Applied Materials AMAT, Lam LRCX, KLA KLAC—and downstream infrastructure beneficiaries—Vertiv VRT, Constellation CEG, Vistra VST. For Financials, focus on flow‑through from Goldman Sachs GS and Morgan Stanley MS beats into peers and asset managers like BlackRock BLK. In Energy, keep risk tight in upstream and midstream given the recent underperformance, while acknowledging strength in services (Baker Hughes BKR and solar (First Solar FSLR.

On the macro front, implementation details from the White House and U.S. Commerce releases should continue to shape expectations for the AI‑hardware capex runway and supplier ordering. Absent fresh macro data in the morning, the equity market is likely to key off earnings revisions, policy clarity, and any incremental cross‑asset signals.

The bottom line: breadth is improving in the right places—semicap, Industrials (airlines/freight), Utilities (power/data‑center exposure)—and traditional Financials are validating the deal‑cycle turn. Use the selective risk‑on to lean into the highest‑conviction parts of the AI and Financials complex while managing exposures in Energy and crypto‑linked equities. According to Monexa AI, this configuration aligns with a “cautiously positive” bias at the open, provided policy headlines remain constructive.

Key Takeaways#

• According to Monexa AI, U.S. indices closed higher (^SPX +0.26%, ^DJI +0.60%, ^IXIC +0.25%) with ^VIX down -1.89%, signaling supportive risk conditions into the open.
• The U.S.–Taiwan semiconductor framework—documented by the White House and U.S. Commerce—anchors the AI‑capex theme; Taiwan Semiconductor TSM closed +4.44% and semicap leaders rallied.
• Financials bifurcated: banks/asset managers rallied on earnings beats—Goldman GS (+4.63%), Morgan Stanley MS (+5.81%), BlackRock BLK (+5.93%)—while crypto‑linked platforms—Robinhood HOOD (-7.79%), Coinbase COIN (-6.48%)—fell.
• Energy weakness at the single‑name level (Devon DVN -4.23%, ONEOK OKE -3.30%) conflicts with a sector snapshot showing gains; we prioritize bottom‑up breadth until the discrepancy is resolved.
• Leadership breadth favored Industrials (United UAL +4.76%, Delta DAL +4.16%), Utilities (Vistra VST +6.63%, Constellation CEG +3.28%), and selective Consumer Cyclical (Darden DRI +3.11%, Starbucks SBUX +2.34%).