TSMC scores record profit, eyes on retail sales, earnings - What’s moving markets
Investing.com - U.S. stock futures were largely steady on Thursday as softer inflation data continued to support hopes that the Federal Reserve can keep interest rates on hold.
Investors are balancing optimism from another round of strong corporate earnings against lingering geopolitical tensions in the Middle East, while results from Taiwan Semiconductor reinforced that demand for artificial intelligence chips remains robust despite recent volatility in the sector.
1. Futures steady as earnings take over
U.S. stock futures were little changed early Thursday as investors shifted their focus from inflation back to corporate earnings and economic data.
By 04:00 ET, S&P 500 futures were down 0.2%, Nasdaq 100 futures fell 0.4% and and Dow Jones futures were flat.
Markets built on gains from Wednesday’s session after softer-than-expected June inflation data eased concerns that the Federal Reserve may need to raise interest rates in the near term.
However, investors remained cautious amid ongoing military tensions between the United States and Iran, while recent sharp swings in semiconductor stocks continued to raise questions about lofty AI-related valuations.
Lower inflation has removed one immediate concern for markets. The focus is now shifting back to whether corporate earnings can justify the strong rally in stocks this year.
2. TSMC delivers another AI-powered quarter
Taiwan Semiconductor Manufacturing Co. reported record quarterly profit, underscoring that demand for artificial intelligence chips remains exceptionally strong.
The world’s largest contract chipmaker posted a 77% jump in second-quarter net profit to T$706.6 billion ($22 billion), comfortably beating analysts’ expectations.
TSMC manufactures advanced processors for customers including Nvidia and Apple, making its earnings one of the most closely watched indicators of global AI investment.
The strong results come just a day after ASML raised its own outlook, providing another sign that companies supplying the AI ecosystem continue to benefit from robust customer demand.
TSMC’s earnings reinforce one of the market’s biggest themes: despite recent volatility in semiconductor shares, spending on AI infrastructure continues to grow rapidly.
3. Apple gets AI approval in China
Shares of Alibaba and Baidu climbed after Apple secured regulatory approval to launch its Apple Intelligence features in China.
Alibaba rose nearly 5%, while Baidu gained about 4% after China’s cyberspace regulator approved Apple’s on-device generative AI services for iPhones.
The approval removes a major hurdle for Apple as it seeks to expand its AI offerings in one of its most important markets. It also benefits local partners expected to play a role in supporting Apple’s AI services in China.
The decision could help Apple better compete in China’s increasingly competitive smartphone market while creating new opportunities for domestic AI companies working alongside the U.S. tech giant.
4. Iran remains a market risk
Despite improving sentiment on inflation and earnings, geopolitical tensions remained elevated after the U.S. military completed another round of strikes against Iran.
U.S. Central Command said Wednesday’s operations targeted sites linked to attacks on commercial vessels transiting the Strait of Hormuz. President Donald Trump also reiterated that military operations would continue until Iran agreed to negotiate.
Although markets have become less reactive to daily headlines from the conflict, investors remain alert to any disruption in one of the world’s busiest oil shipping routes.
The biggest risk is a renewed spike in oil prices. Higher energy costs could reignite inflation pressures, complicating the Federal Reserve’s interest-rate outlook and weighing on broader markets.
5. Busy day ahead for earnings and economic data
Investors are preparing for another busy day of earnings and economic releases that could help determine the market’s next move.
Netflix, GE Aerospace, State Street and U.S. Bancorp are all scheduled to report quarterly results, offering insight into consumer spending, industrial demand and the financial sector.
Markets will also receive June retail sales data and the latest weekly jobless claims report.
Retail sales will provide one of the clearest snapshots of consumer spending, the largest driver of the U.S. economy, while jobless claims remain an important gauge of labor market strength.
Strong earnings combined with resilient economic data would reinforce confidence that the U.S. economy remains on solid footing. On the other hand, weaker-than-expected numbers could revive concerns about slowing growth after this year’s strong stock market rally.