Mid-day Market Summary - S&P500 trades at session highs, Alphabet rallies on earnings news

The S&P 500 is up 0.7% in midday action and is outperforming the other major indices, thanks to an earnings-driven boost from Alphabet (GOOG 2990.66, +233.26, +8.4%). The Dow Jones Industrial Average (+0.4%) and Nasdaq Composite (+0.4%) are up more modestly, while the Russell 2000 trades lower by 1.1%.

Alphabet is up 8% after beating top and bottom-line estimates and announcing a 20-for-1 stock split, raising speculation for more retail ownership and a potential inclusion in the Dow at some point. The S&P 500 communication services sector, which is home to Alphabet, is up 3.3%.

The real estate (+1.2%) and utilities (+1.5%) sectors are also showing decent gains amid a decline in interest rates, while the consumer discretionary (-0.5%) and energy (-0.7%) sectors are the only sectors trading lower right now.

The market’s rebound bias has been tested following the release of a disappointing ADP Employment Change report for January and news that the U.S. is sending approximately 3,000 troops to Eastern Europe to deter against a Russian invasion of Ukraine. ADP estimated a net-loss of 301,000 jobs to private-sector payrolls (Briefing.com consensus +220,000).

Contrary to the broad-based buying in recent days, investors are being more selective with trading activities. Declining issues outnumber advancing issues at both the NYSE and Nasdaq.

Advanced Micro Devices (AMD 122.56, +5.71, +4.9%), like Alphabet, is being rewarded for excellent earnings results. PayPal (PYPL 129.80, -46.02, -26.2%), on the other hand, is sinking 26% after missing EPS estimates and issuing downside guidance for Q1 and FY22.

The Treasury market has firmed up amid the downbeat data and the geopolitical risks, driving the 10-yr yield down five basis points to 1.75%. The U.S. Dollar Index is down 0.4% to 95.97 amid relative weakness in the euro, which is reacting to hot inflation data in the eurozone and the potential for the ECB to rein in policy accommodation as a result.

Notably, the S&P 500 is currently up 8.4% from its intraday low on Jan. 24. Despite calls for a breather, the benchmark index continues to push higher, even after dipping below its flat line earlier today.

Reviewing today’s economic data:

  • The ADP Employment Change report estimated a net-loss of 301,000 jobs to private-sector payrolls in January (Briefing.com consensus +220,000). The increase in December was downwardly revised to 776,000 from 807,000.
  • The weekly MBA Mortgage Applications Index rose 12.0% following a 7.1% decline in the prior week.

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