U.S. Stocks May Extend Upward Move On Upbeat Earnings News

After moving sharply higher over the two previous sessions, stocks may see further upside in early trading on Wednesday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 13 points.

Continued buying interest may be generated in reaction to upbeat earnings news from tech giants Alphabet (GOOGL) and Amazon (AMZN).

Shares of Alphabet are spiking by more than 7 percent in pre-market trading after the Google parent reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Online retail giant Amazon is also seeing notable pre-market strength after reporting better than expected fourth quarter results.

Amazon also announced CEO Jeff Bezos will transition to the role of Executive Chair in the third quarter of 2021, with Amazon Web Services chief Andy Jassy set to become CEO at that time.

Positive sentiment may also be generated in reaction to a report from payroll processor ADP showing a much stronger than expected rebound in private sector employment in the month of January.

ADP said private sector employment jumped by 174,000 jobs in January after decreasing by a revised 78,000 jobs in December.

Economists had expected employment to rise by 49,000 jobs compared to the loss of 123,000 jobs originally reported for the previous month.

“The labor market continues its slow recovery amid COVID-19 headwinds,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

Economists currently expect employment to rise by 50,000 jobs in January after falling by 140,000 jobs in December. The unemployment rate is expected to hold at 8.7 percent.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on activity in the service sector in the month of January.

The ISM’s services PMI is expected to edge down to 56.8 in January from 57.2 in December, although a reading above 50 would still indicate growth.

Stocks moved sharply higher during trading on Tuesday, extending the strong upward move seen on Monday. With the continued advance on the day, the markets further offset the steep losses posted last week.

The major averages all finished the day firmly in positive territory. The Dow surged up 475.57 points or 1.6 percent to 30,687.48, the Nasdaq jumped 209.38 points or 1.6 percent to 13,612.78 and the S&P 500 shot up 52.45 points or 1.4 percent to 3,826.31.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index advanced by 1 percent, while Australia’s S&P/ASX 200 Index climbed by 0.9 percent.

The major European markets are also seeing further upside on the day. While the U.K.’s FTSE 100 Index is just above the unchanged line, the French CAC 40 Index is up by 0.3 percent and the German DAX Index is up by 0.6 percent.

In commodities trading, crude oil futures are climbing $0.65 to $55.41 a barrel after jumping $1.21 to $54.76 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,841.30, up $7.90 compared to the previous session’s close of $1,833.40. On Tuesday, gold plunged $30.50.

On the currency front, the U.S. dollar is trading at 105.03 yen compared to the 104.98 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.2014 compared to yesterday’s $1.2044.