S&P 500 gains for a fourth day as investors buy the January tech dip, Nasdaq jumps led by Alphabet
The Nasdaq Composite jumped on Wednesday as the technology-focused average looked to extend its gains for a fourth day with help from Alphabet.
The index rose 0.8%. The Dow Jones Industrial Average inched 43 points, or 0.1%, higher, and the S&P 500 gained 0.5%.
Tech stocks, which led the market sell-off in January, have been key drivers of the three-day rebound as investors refocused their attention on earnings season, after big tech names continued reporting strong quarterly results and forward guidance.
Google-parent Alphabet pushed the Nasdaq higher Wednesday with a 10% jump in its shares. The company reported a quarterly beat on the top and bottom lines and announced a 20-for-1 stock split, indicating the company might soon be included on the Dow Jones Industrial Average as well.
Chip stock Advanced Micro Devices also gained 14.5% on strong earnings and guidance.
Facebook parent Meta Platforms, which is scheduled to report earnings after the closing bell, added 2.8%. Amazon climbed 2.5%.
“Technology companies were some of the hardest hit in January, as investors feared higher interest rates would expose their lofty valuations and raise their operating costs,” said Jeff Kilburg, chief investment officer at Sanctuary Wealth. “After a dramatic pullback in the tech sector, investors bargain hunted some tech names that had been battered all January.”
Elsewhere, General Motors shares rose 2.6% after the automaker reported earnings that beat estimates and raised its 2022 forecast, though revenue came up light.
On the down side, PayPal tanked 17% after hours, after issuing disappointing guidance. Starbucks dipped 2.7% following its results.
On the economic front, private payroll data fell by 301,000 for the month of January, which was down from December’s growth of 807,000 private payrolls, ADP reported Wednesday. Economists polled by Dow Jones were expecting 200,000 private jobs were added in January.
“The market has strung together a few solid up days,” said Jim Paulsen, Leuthold Group chief investment strategist. “This strong showing is causing more investors to wonder if the correction is over and raising concerns that they could miss out on a nice post-correction rally.”
Earnings season continues on Wednesday with key reporting from Meta Platforms, formerly Facebook, and Qualcomm. AbbVie, D.R. Horton and T-Mobile also report earnings on Wednesday.
So far this earnings season, more than 36% of the S&P 500 has reported and more than 78% have topped Wall Street’s expectations.
“While the earnings season began with some disappointments last week, it has become more solid in recent days,” added Paulsen.
The major averages are coming off of a volatile month, mainly spurred by a pivot in the Federal Reserve. However, some Fed members have have offered reassuring commentary that they do not want their pending rate hikes to disturb the financial markets and that few see any appetite for a 50 basis point hike.
