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S&P 500 ekes out small gain for its third positive day, Alphabet pops

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The S&P 500 climbed slightly on Wednesday, rising for a third straight day as investors digested a wave of corporate earnings.

The broad equity benchmark rose 0.1% to 3,830.17, supported by energy and communication services. The Dow Jones Industrial Average gained 36.12 points, or 0.1%, to 30,723.60. The tech-heavy Nasdaq Composite dipped less than 0.1% to 13,610.54 amid a drop in Amazon shares.

Shares of Google's parent Alphabet jumped 7.3% after the technology giant reported 23% revenue growth and topped estimates for earnings, boosted by Google's recovering advertising business.

Amazon reported earnings that nearly doubled Wall Street estimates, while delivering its biggest revenue of all time at $125.56 billion, pushing it past the symbolic $100 billion mark for the first time. The ecommerce leader also announced that Jeff Bezos is stepping down as CEO. Amazon's stock fell 2%.

Amgen fell 1.4% after the biotech firm issued a weaker-than-expected full year outlook, noting that the pandemic would continue to hurt sales. Amgen was the biggest loser in the blue-chip Dow.

Investors cheered a rebound in U.S. employment last month. A report Wednesday from payroll processing firm ADP showed private firms added 174,000 jobs in January, above the 50,000 Dow Jones estimate.

"Under the surface there is an economy regaining serious momentum," said Mike Loewengart, managing director of investment strategy at E-Trade Financial. "When matched with stellar earnings reports from big tech names this week, along with a reinvigorated vaccine push and COVID cases dropping across the US, a positive full picture is emerging."

Wall Street was coming off a strong back-to-back rally as the Reddit-fueled retail trading frenzy dissipated, restoring investor confidence on the broader market. The 30-stock Dow has gained 2.5% this week after posting its best day since November on Tuesday. The S&P 500 has climbed more than 3% this week, while the Nasdaq has jumped more than 4%.

"Short squeeze fears abate and contagion contained for now," Maneesh Deshpande, head of equity derivatives strategy at Barclays, said in a note. "Despite the relatively strong blowout in these names, on an aggregate level the subset of short squeeze stocks impacted continues to be a negligible fraction of the U.S. equity market."

After a meteoric, albeit seemingly synthetic rise in GameStop last week caused by a short squeeze, shares have cratered more than 70% this week. Other Reddit trades have also come back down to Earth amid trading restrictions from major brokers. GameStop swung between gains and losses in volatile trading on Wednesday and ended the session up 2.7%.

Investors are also monitoring negotiations in Washington surrounding another stimulus package. President Joe Biden met with 10 Republican senators on Monday to discuss an alternative, smaller aid proposal to his $1.9 trillion package.

Earnings season continues on Wednesday with chipmaker Qualcomm, eBay, PayPal and Yum China reporting after the closing bell.

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