U.S. stocks headed modestly higher Wednesday morning, as the technology-sector was driven up on the back of banner results from Google parent Alphabet and microchip maker Advanced Micro Devices.
Wall Street also was parsing a report from Automatic Data Processing, which showed that U.S. economy shed 301,000 private sector jobs in January as it wrestled with the spread of the omicron variant of coronavirus.
On Tuesday, the Dow rose 273 points, or 0.78%, to 35405, the S&P 500 increased 31 points, or 0.69%, to 4547, and the Nasdaq Composite gained 106 points, or 0.75%, to 14346.
Markets were trading modestly higher even as an employment report from ADP indicated a sharp, unexpected reduction in private-sector payrolls for January.
The report shows that payrolls for the private sector fell by 301,000 in January, well below estimates for a gain of 200,000, according to an average of estimates from economists polled by The Wall Street Journal. The reading, which comes ahead of the closely watched U.S. Labor Department jobs report for January on Friday, marks the first negative jobs growth since December of 2020 and may highlight the impact of the omicron strain on employment. The ADP report, however, doesn’t always align with the Labor Department’s NFP report.
“Markets have held up despite a shocking 301,000 decline in US ADP payrolls which was far short of the 207,000 increase the street had expected, and December’s 776,000 increase,” wrote Colin Cieszynski, chief market analyst at SIA Wealth Management, in a daily note.
“Investors may be discounting this number partly as seasonal and partly as a temporary decline due to the Omicron wave,” the analyst wrote.
The jobs data comes as investors were digesting quarterly results from Alphabet Inc., which accounts for about 4% of the Nasdaq-100 and 2% of the S&P 500 by weight. That company’s stock surged 10% in premarket trade after announcing a 20-for-1 stock split and reporting stronger results than forecast in the fourth quarter. The results raise the bar for social-media giant Meta Platforms FB, +1.38%, formerly known as Facebook Inc., which reports results after Wednesday’s close.
Investor sentiment has been swinging between concern over Federal Reserve monetary policy tightening and confidence in the economic recovery, resulting in volatile trading to start the year. A healthy corporate earnings outlook is helping to ease the uncertainty though. Of the 200 S&P 500 companies that have reported results so far, 80% have met or beaten estimates.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, was expected to stick to a plan for an increase of 400,000 barrels of oil per day each month, but it is unclear what other measures the group by institute amid a surge in oil values and persistent concerns about COVID.
Investors also continued to monitor tensions between the U.S. and Russia over Ukraine. Western officials say Russia has massed more than 100,000 troops near Ukraine border while diplomatic talks have yet to make a breakthrough.