Goldman Sachs Blows Away Expectations As Trading, Investment Banking Boost Results


The market is continuing its rally this morning on promising coronavirus vaccine news and a better-than-expected report from a big bank, helping investors shrug off increasing tensions between the United States and China.

News of promising early-stage results from an experimental vaccine from Moderna Inc (NASDAQ: MRNA) helped send the company’s shares up more than 17% in pre-market trading. More broadly, the news encouraged traders and investors about the possible vaccine’s potential to help the economy get its feet back under it.

Still, it should be noted that the news is from an early study involving a relatively small number of patients. Even though it seems there’s a lot more work to be done on the vaccine front, the strong reaction in the market shows how anxious investors are for a cure.

Meanwhile, earnings season continued as Goldman Sachs Group Inc (NYSE: GS) opened its books. The bank earned $6.26 per share, far above a consensus estimate of $3.78. Revenue also surpassed expectations as the bank was helped by trading and investment banking activities. 

Despite the bumper quarter, GS, along with other financial institutions, has set aside a lot of money for potentially bad loans as the coronavirus takes its toll on the economy. But for now, investors are cheering GS’s bumper quarter, which is helping market participants look past some troubling news on the U.S.-China front.

The Trump administration has slapped sanctions on China for its treatment of Hong Kong and ended the special status the United States has long given to Hong Kong. China said it would impose sanctions against U.S. individuals and entities.

Turnaround Tuesday

The market was able to bounce back sharply yesterday from it’s Monday blues. All of the S&P 500 Index (SPX) sectors ended in the green, led by Energy and Materials. 

Although oil prices gained slightly and inflation figures came in a bit above expectations – arguably a good thing at the moment—it didn’t seem like those were driving factors in Tuesday’s rally. They were more like nice-to-haves.

There was some marginally good news from Florida and California on the coronavirus caseload front, but overall the narrative there—and for many other parts of the country—is worry about the economic reopening as virus levels keep climbing. 

It seems like the main driver for Tuesday’s rally might have been a buy-the-dip mentality that seems to have been emerging. The SPX hasn’t had two consecutive down days in more than a month.

It was interesting to note that the gains in the Information Technology sector put it in the middle of the pack Tuesday, and the Nasdaq Composite (COMP) lagged the other two main U.S. indices in percentage terms. 

Big tech stocks have been market leaders recently as investors have wanted to put money into the mega cap equities even if they didn’t want to bet the farm on other types of stocks. But on Tuesday, it seems that some of that money may have been rotating into other kinds of companies. 

Stocks Vs. Economy

The stock market …

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