Goldman Sachs, JPMorgan Chase and Wells Fargo all released first quarter results that beat analysts’ expectations, but Wall Street ended on a mixed note on Wednesday.
Wall Street indices closed mixed on Wednesday, with the Nasdaq Composite and the S&P 500 falling despite another intraday record for the latter and excellent results from the big banks on the first day of the earnings season.
Shares of Goldman Sachs Group Inc and Wells Fargo & Co rose on windfall profits in the first quarter.
Goldman capitalized on record levels of global trading activity, and Wells reduced bad debt provisions and contained costs related to its sales practices scandal.
Shares of JPMorgan Chase & Co fell despite the largest U.S. bank’s profit surge by nearly 400% as it released more than $ 5 billion in reserves to cover defaults due to coronaviruses.
“The bank’s earnings were strong, but the market expected them to be strong,” said Christopher Grisanti, chief equity strategist at MAI Capital Management.
“So the question is how do bank stocks rise further from here. It’s not clear. They had a great ride. I think there will be other places where it is easier to make money in the future. “
Despite exceptional trading and investment banking income, loans from JP Morgan and Wells Fargo are down from a year ago.
Investors will closely monitor this measure in the upcoming earnings of smaller banks, which focus more on traditional loans and deposits.
The KBW Regional Banking Index has outperformed the KBW Bank Index year to date, although the latter – which represents 24 of America’s largest banks – has beaten the Small Institutions Index in the past month.
“Financial services have been working well for a while, so we’re happy with it now, but will we reach a point of diminishing returns in this industry? 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 performers in the first quarter, rising 15% even as the Federal Reserve pledged to keep interest rates low for the foreseeable future. It increased on Wednesday.
Low rates designed by the Fed were one of the main reasons for the stock market surge over the past year [File: Brendan McDermid/Reuters]
The S&P 500 energy sector was the biggest winner among the 11 sub-indices as it followed the rise in oil prices.
Unofficially, the Dow Jones Industrial Average rose 54.87 points, or 0.16%, to 33,732.14, the S&P 500 lost 16.75 points, or 0.40%, to 4,124.84 and the Nasdaq Composite fell 138.26 points, or 0.99%, to 13,857.84.
The Nasdaq was weighted by tech-related stocks including Apple Inc, Microsoft Corp and Tesla Inc.
Coinbase Global Inc jumped on its Nasdaq listing on Wednesday. Its shares opened at $ 381 against a benchmark price of $ 250.
Cryptocurrency and blockchain-related companies, including Riot Blockchain and Marathon Digital Holdings, fell after soaring before Coinbase’s debut and as bitcoin hit a record high of over $ 63,000 on Tuesday.
