Jobs Cooled. Chips Hit a Record.

GOOD MORNING, Wall Street heads into the weekend with a cleaner version of the 2026 bull case: softer jobs, strong AI demand and broader market leadership. December payrolls rose by just 50,000, below expectations, keeping roughly two Fed cuts priced for the year. The S&P 500 still closed at a record as the semiconductor index jumped 2.7% to its own high, helped by Broadcom and Lam Research. TSMC added the fundamental proof, reporting 20.5% fourth-quarter revenue growth. The macro backdrop is giving valuations room. AI earnings still have to justify how much of that room they deserve.

MARKETS | TLDR

The S&P 500 closed at a record: The S&P 500 rose 0.65%, the Nasdaq gained 0.82% and the Dow added 0.48%, capping strong weekly gains across all three indexes.
Semiconductors hit another high: The PHLX Semiconductor Index jumped 2.7% to a record, with Broadcom up 3.8% and Lam Research up 8.7%.
Oil rose as geopolitical supply risk returned: Brent gained 2.18% to $63.34 and WTI rose 2.35% to $59.12 as unrest in Iran and uncertainty over Venezuelan exports lifted the risk premium.

TSMC

TSMC Just Gave the AI Rally Fresh Fundamental Cover

TSMC reported fourth-quarter revenue of T$1.046 trillion, or about $33.1 billion, up 20.45% from a year earlier and above the LSEG SmartEstimate of T$1.036 trillion. The company’s customers include Nvidia and Apple, making its sales one of the cleanest upstream indicators of demand for advanced chips.

The result matters because AI stocks entered 2026 with valuations already elevated after another strong year. TSMC’s revenue provides actual operating evidence that demand remains strong enough to support at least part of that premium. Foxconn, Nvidia’s largest server manufacturer, had also just reported fourth-quarter sales of T$2.603 trillion, reinforcing the same message from another layer of the supply chain.

The next test is January 15, when TSMC will report full earnings and update investors on 2026 revenue growth and capital spending. Revenue confirms demand. Capex will show how much confidence management has that the cycle can persist — and how aggressively it plans to add the capacity needed to serve it.

FED

50,000 Jobs Kept the Fed-Cut Story Alive

U.S. payrolls rose by 50,000 in December, below the 60,000 economists surveyed by Reuters had expected. The unemployment rate dipped to 4.4% from 4.5% expected, preventing the report from becoming a clean recession signal.

That balance was favorable for markets. Hiring slowed enough to keep expectations for roughly 54 basis points of Fed easing in 2026 intact, but not enough to suggest the labor market was collapsing. It gave equities the version of soft data they prefer: less policy pressure without an obvious earnings threat.

The caveat is that the Fed is unlikely to treat one soft payroll number as a reason to move quickly. The unemployment rate improved, and inflation remains above target. December CPI arrives Tuesday. If inflation is sticky, the market may discover that weaker hiring alone is not enough to unlock the full rate-cut path investors are pricing.

HEADLINES

Broadcom rose 3.8% as chips led the market: The move helped push both the semiconductor index and S&P 500 to records, showing that AI infrastructure remained the market’s strongest leadership group.
Lam Research jumped 8.7%: A Mizuho price-target increase amplified gains in semiconductor equipment, another sign investors were reaching beyond GPU designers into the manufacturing stack.
Vistra surged 10.5% after a Meta nuclear-power deal: Meta’s 20-year agreements to buy electricity from Vistra’s nuclear plants reinforced the second-order AI theme: compute demand is becoming a long-duration power-demand story.
Intel rallied nearly 11%: The move followed Trump’s meeting with CEO Lip-Bu Tan, highlighting the political importance now attached to domestic semiconductor manufacturing.
Housing stocks jumped after Trump ordered $200 billion of mortgage-bond buying: LoanDepot rose 19.3%, Rocket gained 9.6% and Opendoor jumped 13.1%, showing how policy intervention can quickly redirect capital toward rate-sensitive sectors.

UPCOMING

U.S. CPI — January 13: December inflation is the week’s biggest macro test because softer jobs only help the Fed if price pressure is also moving in the right direction.
U.S. PPI — January 14: Producer prices will offer another read on pipeline inflation and corporate margin pressure.
TSMC earnings — January 15: Investors will focus on 2026 revenue growth, margins and capex after Friday’s revenue beat validated strong AI demand.
Big-bank earnings: JPMorgan and other large banks will open earnings season and provide a read on trading, credit, lending and deal activity.

DEEP INSIGTHS

TSMC Fourth-Quarter Revenue Jumps 20%, Beats Forecasts

Read this for the most direct fundamental confirmation of the AI hardware cycle entering 2026. TSMC’s revenue growth, Foxconn’s server sales and the upcoming capex outlook together show whether the physical buildout is still accelerating beneath elevated stock valuations.

Earnings and Inflation Pose the Next Tests for U.S. Stocks

This is the cleanest setup for the coming week. The S&P 500 entered January with strong momentum and high valuations, while earnings season and CPI arrive almost simultaneously. The next move depends on whether profits remain strong enough to justify the market while inflation stays soft enough to preserve the rate-cut narrative.