Goldman Sachs, JPMorgan Chase and Wells Fargo all announced first quarter earnings that beat analyst projections, but Wall Street ended up mixed on Wednesday.
Wall Street indices closed on Wednesday mixed, with the Nasdaq Composite and S&P 500 falling despite another record high for the latter and the big banks’ excellent results on the first day of earnings season.
Goldman Sachs Group Inc and Wells Fargo & Co stocks rose on earnings in the first quarter.
Goldman took advantage of record levels of global activity and Wells reduced bad debt provisions and got the costs related to the sales practices scandal under control.
JPMorgan Chase & Co’s shares fell despite the largest U.S. bank’s profits rising nearly 400 percent as more than $ 5 billion in reserves were released to cover coronavirus-related loan losses.
“Bank profits were strong, but the market expected them to be strong,” said Christopher Grisanti, chief equity strategist at MAI Capital Management.
Employees at Coinbase Global Inc, the largest U.S. cryptocurrency exchange, watch their listing appear on the Nasdaq MarketSite jumbotron in Times Square in New York City, United States [File: Shannon Stapleton/Reuters]“So the question arises as to how bank stocks will rise faster from here. It is not clear. You have had a nice trip. I think there will be other places in the future where it is easier to make money. “
Despite the bumper trading and investment banking revenue, JP Morgan and Wells Fargo loans declined year over year.
Investors will closely monitor this metric in the upcoming earnings of smaller banks that are more focused on traditional lending and deposits.
The KBW Regional Banking Index has outperformed the KBW Bank Index so far this year, although the latter – the 24 largest US banks – outperformed the index of smaller institutions last month.
“Financials have been doing well for some time, so we’re happy with them now. However, are we going to get to a point where returns in this sector are falling? I don’t know, “said Drew Horter, president and chief investment officer of Tactical Fund Advisors in Cincinnati.
The S&P 500 financial sector was one of the best in the first quarter, up 15 percent despite the Federal Reserve pledging to keep interest rates low in the near future. It rose on Wednesday.
Low interest rates developed by the Fed were one of the main reasons for the surge in equity markets over the past year [File: Brendan McDermid/Reuters]The energy sector S&P 500 was the biggest winner among the 11 sub-indices as it saw higher oil prices.
Unofficially, the Dow Jones Industrial Average rose 54.87 points, or 0.16 percent, to 33,732.14, the S&P 500 lost 16.75 points, or 0.40 percent, to 4,124.84, and the Nasdaq Composite fell 138.26 Points, or 0.99 percent, to 13,857.84.
The Nasdaq was weighed by technology-related stocks such as Apple Inc, Microsoft Corp, and Tesla Inc.
Coinbase Global Inc listed on the Nasdaq on Wednesday. The shares opened at a price of $ 381 versus a reference price of $ 250.
Cryptocurrency and blockchain-related companies including Riot Blockchain and Marathon Digital Holdings fell after skyrocketing ahead of Coinbase’s debut, with Bitcoin hitting a record high of over $ 63,000 on Tuesday.