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By Jeffrey
Cane | Wednesday, February 2 Groundhog
Day. Today
first seemed to resemble Groundhog Day, the
movie, with stocks advancing -- again with a notable ascent after
lunch –in a repeat of the three previous sessions. The trading was
helped in large part by tech earnings. Same story, different day. After the
market closed, however, it looked more like Punxsutawney Phil predicting
six more weeks of winter. Indeed, a bone-tingling chill has been felt
in the market. In after-hours trading this evening, shares of Facebook parent
Meta Platforms and Spotify
Technology were tumbling
after surprisingly weak outlooks from both companies. Meta's
results and guidance in particular looked certain to drag down the
tech sector tomorrow. More on that below. As we near the
halfway point of the quarterly earnings season, it's a reminder
that earnings giveth, and earnings taketh away. We are just two days away
from the weakest month for stocks since the start of the pandemic. Plenty of
concerns remain over higher interest rates, persistent inflation, and the
path of the pandemic, not to mention the nervousness over the situation in Eastern
Europe. Company surprises will only add to a potentially volatile mix. Today, the S&P 500
closed up 0.9% for its biggest four-session gain since November 2020. All but
one (consumer discretionary) of its 11 sectors gained. The Dow
Jones Industrial Average ended up 0.6%, the Nasdaq
Composite, up 0.5%. The three market measures last had a
four-day winning streak in late December. The Russell 2000, however, broke
its own winning streak of three sessions, ending down 1%. Before this evening's letdown, Big Tech had
wowed again with Alphabet's quarterly
results after the market close yesterday. The parent of Google
also announced a 20-for-1 stock split. Alphabet's shares surged 7.5%, while
its class C shares (ticker: GOOG) climbed 7.4%. Advanced
Micro Devices also had a
blow-out quarter and provided a forecast that was much stronger
than expected. Its shares rose 5.1%. Other semiconductor companies gained
too. Xilinx, whose acquisition by
AMD is expected to close soon, rose 4.9%, and Micron Technology
advanced 3.8%. Match Group, home to dating sites
like OKCupid and Tinder, just missed expectations for its revenue growth
yesterday. Executives pointed to the effect the Omicron surge had on
"dating sentiment" and mobility, and its shares rose 5.3% today.
"We're hopeful that once we get past the effects of Omicron, we could
even have that summer of love that we had expected back in 2021, after the
vaccines were introduced," Gary Swidler, Match's chief
operating officer and chief financial officer, said on the earnings call
today. Some stocks could not find any love. PayPal
Holdings tumbled 24.6% after reporting fourth-quarter
results. What unnerved investors, was the company's forecast that it would
add just 15 million to 20 million new new active accounts this year, a sharp
deceleration from last year's growth of 48.9 million. Barron's
Callum Keown has more here. Logistics provider C.H.
Robinson reported
fourth-quarter adjusted earnings per share that came up short of estimates.
Its operating expenses increased 33.9% in the quarter, "primarily driven
by increased salaries, incentive compensation and technology expenses,"
the company said. Its shares sank 11.5%. Crude oil futures rose slightly, to $88.26 a barrel,
after OPEC and its allies said they would stick to plans to increase
production by 400,000 barrels of oil in March. My colleague Avi
Salzman wrote
that it was "a sign that the powerful oil-producing bloc has not been
spooked by high prices or fears of losing market share." The Energy
Select Sector SPDR exchange-traded fund ended up 0.3%. Treasury
yields slipped after a report from ADP
showed a loss of 301,000 jobs in the nonfarm private sector in January.
Wall Street had been expecting a gain. The yield on the two-year note
settled at 1.154%, while the yield on the 10-year ended at 1.765%. The trouble, of course, is that the payrolls
report will reflect the worst of the Omicron surge, notes Joshua
Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc.
He wrote: the payroll figures are based on how many
people are working during a "survey reference week," which is the
calendar week that includes the 12th of the month, and this year that was the
week of Jan. 9-15. According to the CDC, the highest seven-day average case
Covid case count occurred on Jan. 15, so the survey week came right at the
peak of the Omicron effect in the United States. A lack of clarity about the economy and a
surprisingly weak outlook from a tech giant will weigh on investors' minds.
It could be a long winter. |
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DJIA: +0.63% to 35,629.33 The Hot Stock: Alphabet +7.5% Best Sector: Communications
Services +2.0% |
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