Wall Street Shakes Off Pullback Trading, Semiconductor Sector Leads Recovery

U.S. stock markets staged a meaningful comeback on Thursday, bouncing back from the selloff that dominated the previous two days. The recovery wasn’t broad-based at first, but tech and semiconductor strength gradually pulled the broader indices higher as the session progressed.

By afternoon trading, the Nasdaq had climbed 177.33 points (0.8%), reaching 23,649.08, while the S&P 500 gained 39.70 points (0.6%) to 6,966.30. The Dow Jones Industrial Average added 296.96 points (0.6%), settling near 49,446.59—both indexes knocking on the door of their recent record highs. Though the major averages weren’t at their session peaks, the sustained strength suggested more than just relief-buying after the pullback trading of recent days.

Taiwan Semiconductor Ignites Chip Rally

The catalyst for this turnaround was unmistakable: Taiwan Semiconductor Manufacturing Company (TSMC) delivered fourth-quarter results that exceeded expectations, with the chipmaker surging 6.5%. Beyond the record quarterly profit figures, what captured investor attention was TSMC’s aggressive capital spending guidance—a clear signal that management believes the artificial intelligence boom has staying power.

“The capex commitment TSMC is announcing suggests real conviction that AI demand remains robust,” industry observers noted, pointing to the company’s forward guidance of 30% revenue growth for 2026. This kind of confidence from the world’s largest chip manufacturer rippled through the semiconductor complex, lifting the Philadelphia Semiconductor Index to a record intraday high, up 3.0% on the day.

Computer hardware stocks rode coattails, with the NYSE Arca Computer Hardware Index jumping 2.5%. Networking and financial stocks also benefited from the broadening recovery, though pharmaceutical names moved in the opposite direction with noticeable weakness.

Pullback Trading Paused by Jobs Market Resilience

Beyond the positive sentiment from corporate earnings, labor market data provided support for the recovery. Initial jobless claims unexpectedly fell to 198,000 in the week ending January 10th—down 9,000 from the prior week—defying economist expectations for a rise to 215,000. This resilience in employment dynamics helped ease recession fears that had weighed on sentiment during the recent pullback.

Mixed Global Picture

International markets remained choppy. Japan’s Nikkei 225 dipped 0.4% and China’s Shanghai Composite slipped 0.3%, while South Korea’s Kospi climbed 1.6%. European indices showed thin gains, with the FTSE 100 up 0.5%, the DAX flat (+0.1%), and the CAC 40 slightly lower (-0.3%).

In fixed income, treasuries surrendered recent gains, with the ten-year yield rising 1.8 basis points to 4.158%.