US Open: Nasdaq breaks above 17,000 as AI lead semiconductors optimism 🔌

• US100 gains 0.8%. The US30 and US500 indexes are trading flat due to a few companies related to semis
• Taiwan Semiconductors (TSM.US) gains 8% on wave of AI-related optimism. 
• Strong U.S. labor market data supports the dollar, while a rally in technology companies improves Wall Street sentiment

Today's session is passing with gains on technology companies, supported by great results from the largest chipmaker, Taiwan Semiconductors (TSM.US), and comments from its CEO, who indicated that the AI trend is not yet even the tip of the iceberg of what's to come in the next few years. As a result, we see today's Nasdaq100 'resilient' to hawkish comments from Bostic at the Fed, who stressed that a lower rate of decline in inflation would cause the Reserve to consider maintaining a policy of 'higher rates, for longer.'

This narrative was supported by today's macro data from the U.S., which came in well above forecasts, lifting the dollar higher and 10-year bond yields up 0.03% in a matter of minutes. Both benefit claims surprised positively, as did building permits. Only the Philadelphia-area regional Fed index turned out to be weak. Wall Street does not look particularly concerned today about the prospect of a more hawkish Fed, led by optimism, related to AI technology. We can see huge gains especially in semiconductors where stocks as Nvidia, AMD and Marvell Technology are leading in gains. 

Strong macro without panic reaction on Nasdaq

Source: Bloomberg Financial LP

Data showed much lower numbers of jobless claims, while Wall Street expected a slightly higher number than previously. What's more, continued claims data are also much lower than anticipated. Today's reading signals that the US job market is in very good shape, which may signal higher risk of another inflation wave, if any supply shocks occur. In the result, Fed may want to hold interest rates higher and will not cut in January, nor in March. Also, data of housing starts and building permits came in stronger than expected, despite very high real rates in US economy. The reading of the regional Philadelphia Fed index came in lower than expected, but markets ignored those data and probably read them as less important, especially from the Fed point of view. At the same time, it's another weak, regional reading after 'tragic' NY Empire State. On the other hand, strong macro means strong consumers and can support rising companies revenue and margins growth.

US100 chart (M30)

Nasdaq100 futures are breaking above 17,000 points today, and a more sustained break through this resistance could indicate a test of historical highs. The increases are taking place today on high buying volume and the benchmark recently broke above 16,900 points, overcoming the 23.6 Fibonacci retracement of the downward wave from January 5. The main resistance level is now the 17,200-point zone. 

Source: xStation5

Technology companies are leading in Wall Street gains today, companies from the 'old economy' are losing. Significant declines are seen in the oil and gas and medical sectors. Source: xStation5

News from companies

• Birkenstock (BIRK.US) is trading at double-digit declines, despite successful fourth-quarter results, suggesting profits realization. Everscore analysts indicated that the stock's valuation already reflected expectations of a stronger Christmas quarter report and a slightly better 2024. 
• Apple (AAPL.US) gains more than 2.5% supported by Bank of America's upgrade of its outlook, which changed its rating on the company's stock to buy, from previously neutral highlighting a new revenue stream from VR and AR
• Discover Financial (DFS.US) loses as the bank reported higher loan loss provisions and Q4 results missed analysts' expectations
• Sector health insurance companies are trading down, after Humana (HUM.US), losing 12% today, lowered its 2023 adjusted earnings per share forecast, citing higher patient costs. Cigna (CI.US) and Elevance Health (ELV.US) are also losing on the wave.
• KeyCorp (KEY.US) shares, as Q4 2023 earnings per share missed forecasts, and the lender also expects a decline in 2024 interest income
• Analysts at TD Codwen stressed that Kinder Morgan's (KMI.US) weaker results were due to weak natural gas and CO2 segments. The company reported lower-than-forecast results in net income as well as revenue 
• Cybersecurity company shares Palo Alto Networks Inc. (PANW.US) are gaining nearly 2% today after analysts at Bernstein initiated coverage for the company's shares with a $402 price target and an 'overweight' rating 
• Pinterest (PINS.US) shares gain after Argus Research raised its rating of the company from hold to buy