US stocks rose on Thursday as Wall Street attempted to recover from back-to-back losing sessions, with strength in semiconductor shares helping to lift broader market sentiment amid a mixed geopolitical and policy backdrop.
The S&P 500 climbed 0.6%, while the Nasdaq Composite advanced 0.9%.
The Dow Jones Industrial Average added 165 points, or 0.3%, as gains in technology and financial stocks offset lingering concerns tied to trade policy and international tensions.
Despite Thursday’s gains, markets are coming off a volatile stretch. Stocks fell on Wednesday as weakness in technology shares and geopolitical risks weighed on sentiment.
Nvidia, in particular, has been under pressure this week after Reuters reported that Chinese customs authorities advised agents that the company’s H200 chips are not permitted to enter China, adding to uncertainty around one of its key growth markets.
Chip stocks lead the rebound
Semiconductor shares were the clear leaders of the session after Taiwan Semiconductor Manufacturing Co. delivered another record quarter, reigniting investor confidence in the durability of artificial intelligence-driven demand.
Taiwan Semiconductor jumped 4% after reporting a 35% rise in profit, underscoring strong demand for advanced chips used in AI applications. The results helped steady sentiment after recent volatility in the sector.
Other chipmakers moved higher in sympathy. Micron Technology gained 2%, Nvidia advanced 2%, and Advanced Micro Devices rose nearly 4%.
The rally came after several sessions of pressure on AI-linked names, which had weighed heavily on broader indices earlier in the week.
The gains also came after President Donald Trump on Wednesday signed a proclamation imposing a 25% tariff on certain semiconductors.
However, the administration said the levy would not apply to chips imported to support the buildout of the US technology supply chain.
Investors appeared to take some comfort from the exemption, viewing it as a sign that critical investments in domestic AI and technology infrastructure would not be disrupted, even as trade tensions remain elevated.
In corporate earnings, Morgan Stanley shares rose more than 1% after the bank reported fourth-quarter results that exceeded expectations, offering some reassurance about the health of financial institutions at the start of the year.
Goldman Sachs, however, slipped slightly despite also beating profit estimates, reflecting more selective investor reactions as earnings season gets underway.
Economic data points to resilience
Fresh economic data also helped underpin Thursday’s rebound, pointing to continued strength in the US labour market and improving conditions in parts of the manufacturing sector.
Initial jobless claims fell to a seasonally adjusted 198,000 for the week ending Jan. 10, down 9,000 from the previous week and well below the Dow Jones estimate of 215,000, according to the Labor Department.
The four-week moving average declined to 205,000, its lowest level since Jan. 20, 2024.
Manufacturing surveys also surprised to the upside. The New York Fed’s Empire State Manufacturing Index rose to 7.7 in January, up 11 points from December and far stronger than the expected reading of 1.0.
Meanwhile, the Philadelphia Fed manufacturing index jumped to 12.6 from -8.8 the previous month, easily beating forecasts for -4.5.
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