Stocks climb higher as markets bounce back from January's slide
Stocks rose in early trading on Wednesday as investors were cheered by strong earnings from Alphabet and the company's plan to split its stock for the first time since 2014. The gains come after the market rose on Tuesday as markets try to bounce back from January's slide.
The broad-based S&P 500 rose 13 points to 4,559, or 0.3%, while the tech-heavy Nasdaq rose 85 points to 14,431, or 0.6%, in early trading. After trading higher when markets opened at 9:30 a.m. ET, the Dow Jones Industrial Average slipped slightly, shedding 0.1%.
Shares of Alphabet, Google's parent company, rose more than 7% after the company reported soaring profits late Tuesday and its first stock split since 2014. While that boosted investors' optimism about corporate profits, the market also digested a disappointing report from the ADP National Employment Report, which on Wednesday said that private-sector employment fell by 301,000 in January.
That marks the first decline in employment in the ADP survey since December 2020.
Investors are trying to figure out how the economy and corporate profits will be affected by upcoming Federal Reserve rate hikes, intended to cool inflation that has surged to a four-decade high. They're also eyeing the impact of Omicron, which caused a record 9 million Americans to be home sick in early January, although economists expect the impact of the COVID surge to pass quickly.
"The return of the buy the dip mantra following extremely oversold conditions, interest rate stabilization, and a relatively solid earnings backdrop have been the primary drivers of the recent recovery," analysts at Piper Sandler said in a Wednesday research note.
Fed officials said in mid-December that plans to wind down bond purchases and other stimulus that are boosting prices would be accelerated to cool inflation. Investors expect the Fed to hike rates at least four times this year, starting in March.
Consumers have kept spending despite price rises, but forecasters worry retail purchases might weaken, crimping economic growth.
On the other side of earnings reports is PayPal, whose shares tumbled 24% in early trading on Wednesday. The company's stock tumbled after a weak quarter and subdued guidance.