Wall Street's main indexes surged on Friday, with chipmakers leading the charge in a week of market volatility that also marked the start of the fourth-quarter earnings season. Memory chipmakers, including Micron, Seagate Technology, and SanDisk, saw significant gains of 2% to 7%, building on their impressive rallies from 2025. The iShares Semiconductor ETF gained 2.1%, outperforming the Nasdaq 100's 1.2% rise, indicating investors' confidence in AI-driven chip demand. Despite this, U.S. stocks were still facing modest weekly losses, with the S&P 500 and Dow Jones Industrial Average inching closer to potential resistance levels. Concerns over a proposed cap on credit card interest rates weighed on lenders' shares and broader markets, despite strong quarterly results from major U.S. banks. However, the week's defensive sectors, such as consumer staples, real estate, and utilities, outperformed, while financials sank, indicating a shift in market sentiment. The Federal Reserve's independence was questioned, with a criminal investigation into Chair Jerome Powell, but White House adviser Kevin Hassett downplayed the probe. Key economic data reinforced the Fed's prolonged rate pause, and market rotation favored undervalued areas, with the S&P 600 and Russell small-cap 2000 indices set to gain 2% each. State Street's fourth-quarter profit fell due to expenses, and independent power producers dropped after a deal to curb electricity prices. The week's market dynamics showcased a mix of sectoral shifts, earnings season impacts, and economic factors, leaving investors with a complex landscape to navigate.
