Daily Stock Market News

Stock Market Today: Dow Rises, Alphabet Surges, PayPal Plunges

Stocks were higher Wednesday after strong earnings reports from Alphabet, GM and AMD gave a lift to the market.

In afternoon trading, the

Dow Jones Industrial Average

was up 147 points, or 0.4%, after the index rose 273 points Tuesday to close at 35,405. The

S&P 500

rose 0.7%, with the technology-heavy

Nasdaq Composite

up 0.3%. The indexes were still below their best levels of the day, with the Nasdaq having been up 1% earlier.

Earnings, in general, are now moving the stock market higher. That hadn’t been the case in the beginning of earnings season. The S&P 500 has risen almost 3% this week, including Wednesday’s early gain. 



(ticker: GOOGL) stock rose 8.4% after the company reported a profit of $30.69 a share, beating estimates of $27.68 a share, on sales of $75.3 billion, above expectations for $72.3 billion. News that the company is splitting its stock added an extra boost.

Advanced Micro Devices

(AMD) stock surged 5.3% after the chip maker reported a profit of 92 cents a share, beating estimates of 70 cents a share, on sales of $4.8 billion, above expectations for $4.5 billion. 

With tech stocks’ aggregate market capitalization accounting for a large chunk of the S&P 500 and Nasdaq’s market cap, these stocks were doing some heavy lifting for the major indexes. Google and AMD, for instance, have a combined market cap of about $2 trillion, which is about 5% of the S&P 500’s total market value.  

The gains reflect a much different tone than the market has seen so far this reporting season. As of Monday, companies that beat earnings expectations had seen their stocks fall 0.4% on average, according to RBC.

Earnings on the S&P 500, in aggregate, have been beating expectations by about 4%, with almost three-quarters of companies beating by any margin, according to Credit Suisse.

The market reaction indicated that stocks were too expensive. Share prices had already reflected the value of firms’ future profits, so the market was demanding even larger earnings outperformance to lift prices.

But now stocks aren’t as expensive. The S&P 500 has fallen as much as 12% on an intraday basis from its all-time high hit in early January, and the S&P’s aggregate forward earnings multiple is down from just over 21 times to just under 20 times. That’s because the Federal Reserve is expected to lift interest rates and reduce the size of its balance sheet to fight inflation. Both moves are causing long-dated bond yields to rise, which makes future profits less valuable.

Tuesday, companies that beat earnings estimates in their Monday evening and Tuesday morning reports saw their stocks rise 3.4% on average, according to Refinitiv data. 

More of the same was happening Wednesday morning, before the stocks pulled back from their highest levels of the day, suggesting the market simply isn’t out of the woods yet. It’s still possible that multiples could come down from here. Morgan Stanley strategists, for instance, forecast an 18 times multiple for the S&P 500 by the end of the year. That isn’t a ludicrous call, as it would mean that investors would get a 5.6% annual yield from companies’ earnings for every dollar of stock they own. That would be 3.6 percentage points higher than the yield on the safe 10-year U.S. government bond, should its yield reach 2%. That type of premium return for owning stocks is somewhat in line with historical averages.

Elsewhere, the January jobs report from ADP showed a loss of 301,000 jobs, missing expectations for a 200,000 gain. The ADP report sets the stage for the Bureau of Labor Statistics’ employment report, which is due on Friday.

Markets want to see a strong job market, but not so strong that the Federal Reserve would become more likely to lift interest rates more than the expected four times this year.

“The ADP report hasn’t been the best jobs indicator these past few years,” wrote Mike Loewengart, managing director of investment strategy at ETrade. “I wouldn’t be surprised if this was shrugged off [by the market].” 

Overseas, London’s

FTSE 100

rose 0.6%. Many bourses in Asia were closed for the Lunar New Year Holiday, but trading continued in Tokyo, where the

Nikkei 225

ended Wednesday with a gain of 1.7%.

Later in the day, with more than 110 constituents of the S&P 500 reporting earnings this week, investor attention will continue to fall on company results. The day ahead sees another report from a Big Tech player—Facebook parent

Meta Platforms

(FB)—as well as


(SPOT) and

T-Mobile US

(TMUS), among others, after the close.

Here are five stocks on the move Wednesday:

D.R. Horton

(DHI) stock gained 0.7% after reporting a profit of $3.17 a share, beating estimates of $2.80 a share, on sales of $7.05 billion, above expectations of $6.69 billion.

General Motors

(GM) stock initially gained, then fell 2.6% after the company reported a profit of $1.35 a share, beating estimates of $1.19 a share, on sales of $33.58 billion, below expectations for $34 billion. 


(PYPL) slumped, down 26%. The fintech and payments group reported fourth-quarter earnings of $1.11 per share, below forecasts of $1.12, on sales of $6.92 billion, which topped estimates of $6.89 billion. Guidance was worse: The company said it expected to see EPS of between $4.60 and $4.75 in fiscal 2022, below forecasts of $5.25.


(SBUX) stock fell 1% after the company reported a profit of 72 cents a share, missing estimates of 80 cents a share, on sales of $8.05 billion, above expectations for $7.95 billion.

Novartis (NVS) fell 2.7% after the Swiss pharma giant posted disappointing fourth-quarter results. EPS of $1.40 came in below expectations of $1.42, and core operating profit of $3.82 billion missed estimates of $3.86 billion.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Jack Denton at jack.denton@dowjones.com

Read More: Stock Market Today: Dow Rises, Alphabet Surges, PayPal Plunges

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