Can Tech Offset Bank Weakness and Drive the S&P 500 Through 7,000?

Adam

Summary:

Tech stocks rebounded on strong Taiwan Semiconductor Manufacturing Co. results, lifting S&P 500 futures toward 7,000, while weak bank earnings remain a drag and easing Iran risks weighed on oil.

S&P 500 futures rebound as TSMC results revive confidence in AI-driven technology demand.

Crude oil eases on lower Iran risk expectations, while silver rebounds amid elevated metals volatility.

Banks remain under pressure after weak earnings, creating selective dip buying opportunities.

For a limited time, get an InvestingPro subscription at the lowest price of the year with our New Year’s sale.

Following yesterday’s bank-driven drop, S&P 500 futures rallied overnight as the technology sector bounced back, thanks to TSMC’s upbeat results. Crude oil fell as investors reduced expectations of US military involvement in Iran, while silver staged a recovery after a 7% drop overnight as precious metals continued to trade with significant volatility. So, among the sectors to watch for opportunities today are chipmakers, energy, and banks.

Technology Stocks Regain Poise

Technology stocks found their feet again on Thursday after Taiwan Semiconductor Manufacturing Co. reignited confidence in the staying power of artificial intelligence demand.

The AI bellwether said it plans to lift capital spending by at least 25%, potentially reaching $56 billion in 2026, while also flagging revenue growth ahead of expectations. That upbeat tone lifted Nasdaq 100 futures sharply, but it also helped S&P 500 futures, while the positivity also spilled into Europe, where the Stoxx 600 hit another record high.

In Europe, chip-equipment makers led the charge, with ASML (OTC:ASMLF), TSMC’s largest supplier, surging sharply, along with Applied Materials and Lam Research. The renewed enthusiasm around AI comes after weeks of rotation away from mega-cap tech and into a broader mix of stocks tied to improving growth prospects.

In Other Markets

Elsewhere, the positive sentiment kept cryptos in demand with Bitcoin sitting close to a two-month high, while the US dollar was broadly steady and the yen undermined even as more warnings of FX intervention hit the wires.

Meanwhile, the rally in precious metals took a breather overnight, before both metals rebounded impressively off their lows again, with silver recovering from -7% at one stage to trade only -2% at above $91, at the time of writing. The other major commodity, crude oil, fell for the first time in six sessions after President Donald Trump suggested he may delay any intervention in Iran.

Worth Keeping an Eye on Banks

Today’s gains in futures and European markets come on the back of a tumble on.

Wall Street yesterday, where bank stocks led the sell-off as the fourth-quarter earnings season got off to an underwhelming start.

Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) were among the hardest hit. Citi posted a 13% drop in fourth-quarter profits, despite a modest rise in annual revenues, while Wells Fargo reported net income that fell short of expectations.

JPMorgan (NYSE:JPM) had already set the tone a day earlier, revealing a 7% fall in profits for the final quarter of 2025, blamed on weaker investment banking revenues and higher provisions for potential loan losses.

The financial sector has been under additional pressure since Trump floated the idea last Friday of capping credit card interest rates at 10%.

That comes after a stellar year for US banks in 2025. They collectively added around $600 billion in market value for the year, according to the FT. The weakness in the sector we observed yesterday could therefore present an opportunity to buy the dip in selected names that have solid fundamentals.

S&P 500 Technical Analysis and Levels to Watch

After finally pushing up to the 7,000 mark a few days ago, S&P 500 futures eased back as traders locked in profits around this psychologically important level. The fact that the index hasn’t moved significantly away from this level to the downside suggests the bullish trend remains intact and more gains could be on the way in the near-term.

That said, the pace of the rally has clearly slowed in recent months, with investors increasingly looking for new catalysts to justify further upside. At the same time, the lack of any convincing bearish triggers has helped keep downside pressure contained, allowing prices to grind higher in a more measured fashion.

Can Tech Offset Bank Weakness and Drive the S&P 500 Through 7,000?_1

Still, this loss of momentum is something to be mindful of, as it can often be an early sign that a correction may not be too far away. For now, though, there are no clear technical reversal signals to point to a change in trend. As a result, attention should remain on key support levels to see whether demand holds and buyers continue to step in on dips.

In terms of support, the 6,940 area has held so far, which was my initial support level to watch. Below that, 6,900 stands out as a more significant support zone, and a decisive break beneath this level could see volatility start to pick up.

On the upside, 7,000 remains the key hurdle. The market will need to clear this level convincingly to unlock a move to fresh highs. Beyond that, there’s little in the way of obvious resistance, suggesting the technical path higher would be relatively open. Keep an eye on the Fibonacci extension levels shown on the chart as the next potential targets in the event of a continuation.

Source: investing

To stay updated on all economic events of today, please check out our Economic calendar

News, historical chart data, and fundamental company data are provided by FastBull Ltd.

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.