Wall St climbs as investors assess bank earnings

By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) – Wall Street rose on Wednesday as investors looked past second-quarter earnings from Goldman Sachs, while taking comfort from strong profits from some of the smaller players in the sector.

Goldman Sachs eased 1.0% after reporting a bigger-than-expected drop in quarterly profit as a retreat from consumer businesses and declining investment values took a toll on the Wall Street behemoth.

Big U.S. lenders rallied on Tuesday after they said higher interest rates had helped boost profits in the second quarter.

“We’ve got a lot of the majors out of the way and they’ve been pretty good so far. This (Goldman) is probably the first hiccup,” said Dennis Dick, market structure analyst at Triple D Trading.

The S&P 500 banking index has fallen 3.4% this year in the aftermath of a banking crisis that took down three lenders and pummeled the regional banking sector.

The benchmark S&P 500 index has notched a 19.2% gain in the same period.

Citizens Financial and M&T Bank beat Wall Street estimates for second-quarter profit, benefiting from the U.S. Federal Reserve’s rapid rate hikes.

Citizens Financial added 1.6%, while M&T Bank rose 3.6%.

US Bancorp slipped 0.3% after the Minneapolis-based lender forecast full-year net interest income (NII) below Wall Street estimates.

At 9:44 a.m. ET, the Dow Jones Industrial Average was up 134.80 points, or 0.39%, at 35,086.73, the S&P 500 was up 19.00 points, or 0.42%, at 4,573.98, and the Nasdaq Composite was up 52.42 points, or 0.37%, at 14,406.06.

All of the top 11 S&P 500 sectors were in the green, led by gains in real estate stocks, which rose 1.3% in early trading.

Carvana jumped 22.8% after the troubled used-car retailer struck a deal with most of its term bondholders to cut its outstanding debt by more than $1 billion.

Tesla rose 0.8% ahead of results expected after the bell, kicking off the earnings season for megacap growth and technology companies whose outsized gains have driven the tech-heavy Nasdaq up 37.7% so far in 2023.

Credit Suisse raised its year-end target on the benchmark S&P 500 to 4,700 from 4,050, citing a decline in the near-term U.S. recession risk and a stronger earnings outlook for the largest technology-related companies.

Results from Netflix and IBM later in the day are also on investors’ radar.

AT&T rose 6.7% after the telecom company said it does not intend to immediately remove lead cables from Lake Tahoe pending further analysis. Peer Verizon also added 3.4%.

Elevance Health advanced 7.2% and was among top gainers on the S&P 500 after the health insurer forecast an upbeat annual profit.

VMware added 6.6% after the UK’s competition regulator provisionally cleared Broadcom’s $69 billion deal to buy the cloud service provider.

Meanwhile, a Reuters poll showed economists expect the Federal Reserve to raise its benchmark interest rate for the last time for the current cycle by 25 basis points on July 26.

Advancing issues outnumbered decliners by a 2.62-to-1 ratio on the NYSE and by a 1.92-to-1 ratio on the Nasdaq.

The S&P index recorded 29 new 52-week highs and no new lows, while the Nasdaq recorded 81 new highs and 23 new lows.

(Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel)