Breakouts: S&P 500 Stocks Near 52-Week Highs After TSMC Earnings, China Stimulus

Markets are recovering in the latter half of the week after news on Iran, China's interest rate cut, and signs that the AI boom is still in full swing.

Five S&P 500 Stocks Breaking 52-Week Highs

• Walmart (WMT) +7.8% YTD
• Exxon Mobil (XOM) +8.2% YTD
• Johnson & Johnson (JNJ) +5.6% YTD
• Chevron (CVX) +9.7% YTD
• Raytheon (RTX) +8.4% YTD

Tech Stocks Rebound on TSMC Earnings

Thursday was very active on the news front, particularly in the Asian session. Markets closed on the back foot on Wednesday, with Iran closing its airspace and reports that US personnel were ordered to leave the military base in Qatar. Everything pointed to an imminent US strike on Iran after US President Donald Trump slapped 25% secondary tariffs on countries doing business with Iran. China, the primary buyer of Iranian crude, protested the action. It was followed by reports that Chinese authorities told domestic firms to stop using U.S. and Israeli cybersecurity software, including products from Broadcom, Palo Alto, and Check Point Software. The news didn't sit well with markets already uneasy after Fed Chair Jerome Powell disclosed that the Fed was under investigation by the US DOJ, raising concerns about systemic pressure from the Administration to influence monetary policy. US equities were trading lower on Wednesday, with the Nasdaq among the worst performers as tech stocks took a hit.

However, a series of events early Thursday turned things around. Trump said he would delay military strikes on Iran as the situation appeared to be improving, allowing some decompression of risk. Then TSMC reported broad-based earnings beats, saying AI demand remained strong, which caused chip stocks and AI-related tech firms to experience a solid bounce on Thursday. Around the same time, the PBOC announced it would cut its relending policy rate by 25 bps, effective January 20th, signalling further support for the economy from Beijing. Commodity prices received support in the latter half of the week, fuelling hopes of a market rebound. Additionally, Trump sought to calm the markets on the Fed, saying he had no intention of dismissing Powell before his term ends in May, despite the ongoing investigation.

Stocks Near 52-Week Highs

A quick look at the top stocks near 52-week highs highlights the impact of geopolitics on equities in the current circumstances, with three of the top five names directly related to US foreign policy.

Exxon and Chevron Up on Venezuela

The two oil majors are continuing to move higher after gaining in the wake of the seizure of Nicolas Maduro, the de facto president of Venezuela, by US forces at the start of the month. However, the moves in both companies respond to different developments. Chevron is already operating in Venezuela, and changes from US intervention are expected to allow the company to increase exports. ExxonMobil made headlines for rebuffing the White House regarding its participation in Venezuela. Nevertheless, press reports suggested that the company's refineries, which specialise in processing heavy crude from Venezuela, are ramping up production after the US officially began selling Venezuelan oil this week.

Raytheon Rebounds on Sales

Defence name Raytheon came under fire from the White House earlier this week, with the President voicing his discontent with the company's policy of returning profits to investors. A few days after the company's share price dipped in response to Trump's social media post, the US Department of War announced a $1 billion investment in its subsidiary, L3Harris. This was followed by authorising the sale of $800 million Patriot missile systems to Kuwait, suggesting that the US government was still supporting the company despite Trump's views on its distribution policy.