In the U.S., stocks are on pace for a fourth straight day of positive returns as a robust earnings outlook is helping to ease uncertainty as concerns remain around inflation, regulatory risks in China, the Russia-Ukraine crisis, and the pandemic. Investors are evaluating the timing and magnitude of the Federal Reserve tightening as input to confidence in the economic recovery as they navigate a volatile start to the year.
After falling into correction territory at the end of January, the S&P 500 is now less than 5% off all-time highs. Overseas, equity markets in mainland China, South Korea, Hong Kong, and Singapore will be closed until next Monday for the Lunar New Year holidays. In earnings, Alphabet (Google) and Advanced Micro Devices were each up around 10% in premarket trading on Wednesday after posting strong results. Meanwhile, Meta Platforms (Facebook), Qualcomm, and Spotify are set to report after the close of trading today. 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.
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. This was the first reported net job loss since December of 2020. Economists were expecting more than 200,000 private jobs to be added in January. The pandemic-sensitive leisure and hospitality industry was responsible for more than half of the decline, as companies reported a drop of 154,000. Meanwhile, tensions at the border between Russia and Ukraine continue to mount. President Joe Biden has sent another 2,000 U.S. troops to Poland and Germany, as Russia continues to maneuver forces around Ukraine’s border. General Mark Milley, the nation’s highest-ranking military officer, said that Russia’s posture along Ukraine’s border was unlike anything he has seen during his four-decade military career.
Source: GSAM, Daily Upside, JPM, Factor Investor
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