Morning Minutes

Indices Rebound As Alphabet Earnings Offset Weak ADP Payrolls

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Building on yesterday’s US market gains of about 0.75% and getting a big boost from Alphabet’s big earnings and stock split announcements, equity markets around the world have been soaring overnight. In Asia Pacific tracing Tokyo jumped 1.7% while Sydny climbed 1.1%. In Europe today, the FTSE is up 0.75% and the Dax is up 0.3%. US premarket action finds technology and communications sensitive NASDAQ futures up 1.35% while S&P futures are up 0.75% and Dow futures are up 0.15%.

Commodity prices are soaring today. Natural gas has spiked 11.2% with another big storm rolling through the east. WTI crude oil is up 1.1%, Brent Crude is trading above $90.00/bbl heading into today’s OPEC+ production decision and copper is up 1.1%. In currency action, gold has moved back above $1,800/oz with a 0.25% gain, while Bitcoin is down 0.4%.  

Markets have held up despite a shocking 301K decline in US ADP payrolls which was far short of the 207K increase the street had expected, and December’s 776K increase. Investors may be discounting this number partly as seasonal and partly as a temporary decline due to the Omicron wave. More North American job data is on the way this week with weekly US jobless claims tomorrow, then the US nonfarm payrolls and Canada Labour Force numbers on Friday.

Alphabet shares have soared 10.6% in premarket trading and have been challenging their previous all-time highs near $3,000. After the market closed yesterday Google’s parent company beat the street on earnings ($30.69 vs street $27.34), beat on sales ($75.3B vs street $72.1B), and announced a 20-for-1 stock split.

Other notable earnings reports have been mixed. PayPal has plunged 16.8% premarket after missing street estimates on EPS by a penny, posting 2022 sales guidance that was below expectations, and noting subscriber growth is slowing. Other notable earnings announcements include AMD ($0.92 vs street $0.76, up 12.4% premarket), Starbucks ($0.72 vs street $0.80, down 2.8% premarket), General Motors ($1.35 vs street $1.19, up 3.3% premarket), and homebuilder DR Horton ($3.17 vs street $2.79, up 4.0% premarket).

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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