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Shocking ADP National Employment Report, Alphabet’s Superb Earnings Call & OPEC+ Votes to Maintain Oil Outputs

S&P 500 higher, despite falling payrolls

The S&P 500 was marginally higher on Wednesday, despite data released showing that private payrolls in the U.S. had dropped.

Figures from the ADP National Employment report showed that payrolls fell by 301,000 jobs last month and comes after markets expected a rise of 207,000.

This is the first time private payrolls have fallen since December 2020, and follow last month’s increase of 776,000 jobs.

💡 Many blame the drop on a surge of Omicron cases, and expect numbers to bounce back as cases fade
The broad decline in private payrolls was led by the leisure and hospitality sector, with 154,000 job losses. Trade, transportation and utilities shed 62,000 jobs. Manufacturing employment decreased by 21,000 jobs. Freezing temperatures last month were also a factor, with construction losing 10,000 jobs.

Wednesday’s report comes ahead of the first Non-farm payrolls of the year, where it is expected that 150,000 will be added to the United States economy.

As of writing, the S&P 500, and NASDAQ were both higher.

Alphabet edge closer to record valuation, after Q4 earnings

One of the reasons for gains in U.S. indices was the market reaction to better than expected earnings from Alphabet.

Alphabet, which is the parent company of Google, reported its quarterly earnings after yesterday’s closing bell, beating all top line targets.

The company reported that revenue for Q4 rose by 32% to $75.33 billion, beating forecasts for a $72.17 billion quarter.

In addition, earnings came in at $30.69 per share vs $27.34 expected, while the company also confirmed a 20-for-1 stock split, which was approved by the board.

💡 Alphabet’s stock split as a strategy 
Alphabet’s stock split comes at a time when the practice was almost forgotten had it not been for Tesla and Apple. Alphabet hopes to make their stock more investor friendly and appeal to smaller retail investors.

Another motivation for the split could be gaining entry to the Dow Jones Industrial Average, whose price-weighted index has been a barrier for years to the likes of Alphabet and also Amazon.com Inc., which has a four-figure stock price, according to Michael O’Rourke, chief market strategist at Jonestrading. 

As of writing, $GOOG was trading 8.14% higher.

OPEC+ opt to keep supply output unchanged

OPEC+ held its monthly meeting on Wednesday, with the cartel voting to maintain its current policy on output.

The cartel, which includes Russia, opted to keep output as is, with moderate increases in supply, starting next month.

News of this comes as U.S. stockpiles of crude dropped by 1 million barrels last week, after many had expected a rise in inventories.

WTI crude fell to an intraday low of $87.46, as price uncertainty in energy markets extended for a third consecutive session.

Brent continued to hover close to its 7-year high above $90 per barrel.

“I believe in analysis and not forecasting.”

-Nicolas Darvas-

Eliman Dambell

Senior Market Analyst