Stocks Get Tech Boost as TSMC Rekindles AI Wagers: Markets Wrap

(Bloomberg) — Wall Street traders brushed aside worries about a tech bubble to send stocks higher after a strong outlook from Taiwan Semiconductor Manufacturing Co. bolstered confidence in the artificial-intelligence boom.

That’s also brought a relative sense of calm for a market that has been whipsawed by concerns about a resurgence in trade frictions between the US and China. A solid batch of corporate results in the first few days of the US earnings season has helped buoy sentiment toward equities, which have also gained on prospects for more Federal Reserve rate cuts.

Subscribe to the Stock Movers Podcast on Apple, Spotify and other Podcast Platforms.

“The third-quarter earnings season should be supportive of our view that the bull market remains intact driven by the combination of durable earnings growth and Fed rate cuts,” said David Lefkowitz at UBS Global Wealth Management. “Results will confirm that the boom in AI investment spending remains well supported, another key tailwind for US stocks.”

Fed Governor Christopher Waller said officials can keep lowering interest rates in quarter-percentage-point increments to support a faltering labor market, while Stephen Miran continued to advocate a larger reduction. Chair Jerome Powell signaled earlier this week that officials are on track to lower borrowing costs by a quarter point in October.

While the weeks-long US government shutdown has delayed the release of key data on employment and other metrics, Treasuries continued posting small moves. The focal points of US session include several Fed speakers and the potential for more corporate bond offerings by big banks. The dollar fell.

The impressive recovery despite all trade headlines and other risks, underscores the importance of trading with the trend, according to Fawad Razaqzada at City Index and Forex.com.

“If you are going against the prevailing bullish trend, it’s always essential to take quick profits and move on to the next opportunity because as evidenced by this week’s price action, the index has nearly bounced all the way back due to the trend being so strong,” he said.

With every twist and turn of the stock market, the retail crowd stays true to its tried-and-tested tactic this year: buying every dip.

“Retail’s bullish conviction remains extraordinary” Scott Rubner, Citadel Securities’ head of equity and equity derivatives strategy wrote in a client note this week.

Risk-on sentiment among the retail crowd comes in contrast with institutional clients, a cohort that was busy buying hedges on Friday, Rubner’s data show. They have now been more inclined to bet on a stock-market drop than a further rally in eight of the past nine weeks.

The equity bull market could be headed for a choppier phase, Citigroup strategists led by Beata Manthey said. With the US-China trade tensions back in focus, the stakes are high and the path to resolution is complex, they added.

China’s decision to unveil unprecedented export controls on the rare-earth supply chain dominated meetings at an annual huddle of global economic chiefs in Washington this week. Treasury Secretary Scott Bessent hinted at an emerging coalition, saying US officials were “speaking with our European allies, with Australia, with Canada, with India and the Asian democracies,” to form a fulsome response.

“While the latest US-China trade flareup has dominated recent market headlines, the story remains the same for stock investors—the importance of focusing on large-cap, quality companies,” said Daniel Skelly, Head of Morgan Stanley’s Wealth Management Market Research & Strategy Team.

While there’s no recession on the horizon, Skelly noted, a cooling labor market and slowing economic growth could pose a challenge for many of the lower-quality, unprofitable companies that hitched a ride on the rally off the April lows.

Corporate Highlights:

Hewlett Packard Enterprise Co. gave an outlook for profit and cash flow for its upcoming fiscal year that fell short of analysts’ estimates, reflecting a margin crunch in the AI era. Salesforce Inc. projected revenue growth will accelerate to double digits in the coming years, potentially easing investor concerns about the pace of business at the software company. United Airlines Holdings Inc. expects brand-loyal flyers and demand for its premium seats to drive profit through the end of the year, maintaining momentum after reporting better-than-expected earnings for the third quarter. JB Hunt Transport Services Inc. reported a quarterly profit that topped expectations. Charles Schwab Corp. reported third-quarter earnings that beat estimates as the firm benefited from a surge in retail investing activity. U.S. Bancorp’s third-quarter revenue topped analysts’ estimates, a positive sign for a company whose shares have been underperforming their main rivals for years. Travelers Cos. reported net premiums written that came in below the average analyst estimates. Taiwan Semiconductor Manufacturing Co. hiked its projection for 2025 revenue growth for the second time this year, reinforcing hopes in the longevity of a global boom in AI spending. Infosys Ltd. raised the lower end its forecast for yearly revenue, banking on a revival in spending on technologies such as artificial intelligence. Nestlé SA’s new chief executive officer, Philipp Navratil, may be following a strategy set in place by his ousted predecessor, but he’s quickly putting his own hard-driving spin on it. Merck KGaA disappointed investors as it outlined new mid-term targets that bank on its life science division driving further growth. Pernod Ricard SA’s sales fell more than expected on a sharp slump in demand in China and the clearing out of excess stock in the US. Will we see more convergence between gaming and finance in the future? Let us know in the latest Markets Pulse survey.

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.3% as of 9:55 a.m. New York time The Nasdaq 100 rose 0.6% The Dow Jones Industrial Average rose 0.2% The Stoxx Europe 600 rose 0.3% The MSCI World Index rose 0.4% Bloomberg Magnificent 7 Total Return Index rose 0.7% Philadelphia Stock Exchange Semiconductor Index rose 0.8% The Russell 2000 Index rose 0.1% Currencies

The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.1% to $1.1663 The British pound rose 0.3% to $1.3438 The Japanese yen was little changed at 151.04 per dollar Cryptocurrencies

Bitcoin was little changed at $111,250.76 Ether rose 2.1% to $4,047.28 Bonds

The yield on 10-year Treasuries advanced one basis point to 4.04% Germany’s 10-year yield was little changed at 2.58% Britain’s 10-year yield declined two basis points to 4.53% The yield on 2-year Treasuries was little changed at 3.51% The yield on 30-year Treasuries was little changed at 4.63% Commodities

West Texas Intermediate crude rose 0.1% to $58.33 a barrel Spot gold rose 1.1% to $4,253.97 an ounce ©2025 Bloomberg L.P.