Good Evening. Here is everything you need to know about today’s recap on the in’s and out’s of the major market and economic events.
Stocks gained in a bumpy session Wednesday as investors digested a new batch of quarterly reports from some big index components and attempted to shake off the volatility of January.
Some additional alarming indicators of an Omicron-induced slowdown in growth at the start of the year were largely countered by a string of better-than-expected corporate profits. According to ADP, private-sector companies in the United States eliminated 301,000 jobs in January, the first drop since December 2020.
The Dow Jones ended the day up 0.77%, and the Nasdaq was up 0.50%. The S&P 500 returned to positive territory, finishing the day up 0.94%.
EARNINGS, EARNINGS, EARINGS
After publishing quarterly financial results and outlook that revealed a dramatic slowdown in momentum for the payments company, PayPal (PYPL) shares dropped more than 25% to session lows on Wednesday, setting the stock up for its worst day on record.
According to Bloomberg consensus statistics, PayPal reported adjusted earnings of $1.11 per share on net revenue of $6.92 billion, missing projections by a penny per share on the bottom line. However, the closely watched payments volume increased by only 23% year-on-year to $339.53 billion, falling short of expectations of $343.47 billion. The number of active customer accounts increased by 9.8 million to 426 million, falling short of forecasts.
PayPal’s outlook for the upcoming quarter and the full year was even more concerning. PayPal reported adjusted earnings per share of 87 cents for the current quarter, well below the $1.17 consensus. PayPal said adjusted earnings for the whole year might be as high as $4.75 per share, falling shy of Wall Street analysts’ expectations of $5.23.
PRIVATE SECTOR EMPLOYMENT
According to ADP’s closely watched monthly report released on Wednesday, private sector employment in the United States declined by 301,000 in January. According to ADP’s revised monthly print, 776,000 payrolls were added back in December, marking the first reduction in payrolls since December 2020. According to Bloomberg data, a consensus of economists expected approximately 180,000 private payrolls to return in January. This is the first time private payrolls declined for the first time in almost a year as the Omicron strain spread.
Monthly payrolls in service-related businesses fell the most, with high-contact positions suffering the most disruptions as a result of the recent influenza outbreak. More than 150,000 leisure and hospitality jobs were lost, reversing some of the recovery’s recent advances. This was followed by a loss of 62,000 jobs in trade, transportation, and utilities in January. Payrolls in education and health care declined by 15,000 people.
The ADP report comes two days before the Labor Department releases its official monthly jobs report, which economists predict to show 150,000 new jobs in January. Due to variances in survey methodology, ADP’s data does not always serve as a clear indicator of what to expect from Labor Department data.