Stocks rose in a choppy session Wednesday as investors mulled a fresh batch of earnings results from some major index components and tried to further shake off January’s volatility. The S&P 500, Dow and Nasdaq gained just after noon in New York.
A spate of better-than-expected corporate earnings helped partially offset some more concerning signs of an Omicron-induced slowdown in growth at the start of the year. ADP reported Wednesday morning that private-sector U.S. employers cut 301,000 jobs in January, marking the first decline since December 2020.
Shares of Alphabet (GOOGL) jumped after the tech juggernaut topped quarterly sales and profit estimates and announced a 20-for-1 stock split. The move may make the stock currently trading at more than $3,000 per share more accessible and attractive to additional investors. Shares of other ad-driven internet technology companies including Meta (FB) and Pinterest (PINS) also gained in late trading following Alphabet’s earnings results.
AMD (AMD) shares also soared after quarterly results beat estimates on nearly every major metric, suggesting it was taking more market share from chip competitors and navigating ongoing components shortages. Starbucks (SBUX) declined as quarterly profits missed estimates, however, and PayPal (PYPL) shares sank after delivering guidance that fell short compared to Wall Street’s expectations.
This week’s slate of earnings results has helped provide a fresh catalyst to markets after a weak January performance. Results from other major companies including Meta, Spotify (SPOT) and Qualcomm (QCOMM) are due out on Wednesday. The S&P 500 closed out Tuesday’s regular trading day higher for a third straight session, kicking off February on a high note after posting its worst month since March 2020 in January. The Nasdaq Composite rose by 0.8% on Tuesday, while the Dow had gained 0.8%.
“We had a pretty rough January. I think we’re seeing a little bit of short covering and some bouncing here off the bottom. I don’t think the market’s settled yet,” Michael Vogelzang, CAPTRUST chief investment officer, told Yahoo Finance Live on Tuesday.
“We don’t quite know yet what the Fed’s going to be doing. We don’t have a good sense of the path of inflation for the rest of the year,” he added. “We have Russia hovering over the Ukrainian border … that has the potential to send oil prices up even higher than they already are, which of course could slow the economy down and drive inflation higher. So I think the market’s really unsettled, trying to find a bottom.”
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4:05 p.m. ET: Stocks rise for a fourth straight session: S&P 500 gains 0.9%, Dow adds 224 points, or 0.6%
Here were the main moves in markets as of 4:05 p.m. ET:
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S&P 500 (^GSPC): +42.84 (+0.94%) to 4,589.38
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Dow (^DJI): +224.09 (+0.63%) to 35,629.33
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Nasdaq (^IXIC): +71.54 (+0.50%) to 14,417.55
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Crude (CL=F): +$0.16 (+0.18%) to $88.36 a barrel
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Gold (GC=F): +$4.60 (+0.26%) to $1,806.10 per ounce
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10-year Treasury (^TNX): -3.4 bps to yield 1.7660%
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11:23 a.m. ET: PayPal shares pace for worst day on record after earnings, guidance miss
PayPal (PYPL) shares fell by more than 25% at session lows on Wednesday, setting up the stock for its worst day on record after posting quarterly earnings results and guidance showed a significant slowdown in momentum for the payments company.
PayPal delivered adjusted earnings of $1.11 per share on net revenue of $6.92 billion, with the bottom-line result missing estimates by a penny per share, according to Bloomberg consensus data. However, closely watched payments volume grew by just 23% over last year to come in at $339.53 billion, missing estimates fo $343.47 billion. Active customer accounts rose by 9.8 million to reach 426 million, also missing expectations.
And of more concern was PayPal’s outlook for the current quarter and full year. For the current quarter, PayPal said it saw adjusted earnings per share of 87 cents, or well below the $1.17 consensus. Adjusted earnings for the full year will likely come in a as much as $4.75 a share, PayPal said, which came in short of the $5.23 estimated among Wall Street analysts.
“Notably, the company attributed the top-line weakness to inflationary pressures that weighed on spending levels across lower-income cohorts, which intensified as stimulus rolled off,” CFRA Equity Research Analyst David Holt wrote in a note Wednesday. He maintained a Hold rating on shares of PayPal and lowered his price target to $186 a share, from $265 seen previously. “PYPL outlined a plan to de-emphasize engagement across lower-yielding net new accounts (NNAs) on the call, but we remain cautious at best, as the story becomes increasingly complex and five-year CAGR targets (i.e., 20% net revenue growth) fall further out of reach.”
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9:30 a.m. ET: Stocks open mostly higher after Alphabet earnings, ADP disappointment
Here’s where markets were trading just after the opening bell:
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S&P 500 (^GSPC): +23.72 (+0.52%) to 4,570.26
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Dow (^DJI): -64.52 (-0.18%) to 35,340.72
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Nasdaq (^IXIC): +115.44 (+0.8%) to 14,471.75
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Crude (CL=F): +$0.65 (+0.74%) to $88.85 a barrel
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Gold (GC=F): +$1.70 (+0.09%) to $1,803.20 per ounce
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10-year Treasury (^TNX): -0.9 bps to yield 1.781%
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8:26 a.m. ET: Private payrolls dropped for the first time since Dec. 2020 in January: ADP
Private payrolls fell for the first time in more than a year in January amid the Omicron variant’s spread.
U.S. private sector employment fell by 301,000 in January, ADP said in its closely watched monthly report on Wednesday. That represented the first drop in payrolls since December 2020, and came after 776,000 payrolls were added back in December, based on ADP’s revised monthly print. Consensus economists had anticipated that about 180,000 private payrolls would return in January, according to Bloomberg data.
Service-related industries posted the largest drops in monthly payrolls as high-contact jobs saw some of the biggest disruptions due to the latest surge in virus cases. Leisure and hospitality jobs fell by more than 150,000 in January, unwinding some recent gains during the recovery. This was followed by trade, transportation and utilities jobs, which together declined by 62,000 in January. Education and health services payrolls fell by 15,000.
Private employers in goods-producing industries also shed payrolls on net during the month. Both manufacturing and construction payrolls dropped in January, by 21,000 and 10,000, respectively.
ADP’s report comes two days before the Labor Department’s official monthly jobs report, which economists expect will reflect payroll gains of 150,000 for January. ADP’s data does not typically serve as a precise indicator of what to expect from the Labor Department data due to differences in survey methodology.
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7:25 a.m. ET Wednesday: Stocks look to rise for a fourth straight session
Here were the main moves in markets before the opening bell:
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S&P 500 futures (ES=F): +37.75 points (+0.83%), to 4,572.75
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Dow futures (YM=F): +51 points (+0.14%), to 35,325.00
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Nasdaq futures (NQ=F): +1246.50 points (+1.64%) to 15,241.25
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Crude (CL=F): unchanged at $88.20 a barrel
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Gold (GC=F): +$2.60 (+0.14%) to $1,804.10 per ounce
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10-year Treasury (^TNX): -1.6 bps to yield 1.784%
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6:10 p.m. ET Tuesday: Stock futures fall to close out volatile month of trading
Here’s where stocks were trading before the opening bell Tuesday evening:
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S&P 500 futures (ES=F): +14 points (+0.31%), to 4,549.00
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Dow futures (YM=F): -63 points (-0.18%), to 35,211.00
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Nasdaq futures (NQ=F): +125 points (+0.83%) to 15,119.75
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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