Benchmarks closed mixed on Wednesday despite better-than-expected earnings report from major banks. Losses in tech stocks weighed on the S&P 500 and the Nasdaq and led them to close lower.
The Dow Jones Industrial Average (DJI) rose 53.62 points, or 0.2%, to close at 33,730.89 and the S&P 500 slid 16.93 points, or 0.4%, to close at 4,124.66. The Nasdaq Composite Index closed at 13,857.84, shedding 138.26 points, or 1%. The fear-gauge CBOE Volatility Index (VIX) increased 2%, to close at 16.99. Advancing issues outnumbered declining ones for 1.45-to-1 ratio on the NYSE, while a 1.22-to-1 ratio on the Nasdaq favored advancers.
How Did the Benchmarks Perform?
The Dow hit an intraday record of 33,911.25 after snapping its 2-day losing streak on Wednesday and closed 0.5% below its all-time closing high marked on Mar 23. Other than big banks that led the Dow higher, more than 1.4% gain in shares of The Travelers Companies, Inc.
TRV
, Chevron Corporation
CVX
and Caterpillar Inc.
CAT
, pushed the blue-chip index higher.
The S&P 500 and the Nasdaq slipped from record levels on Wednesday amid sell-off in technology shares. Of the 11 major sectors of the broader index six closed in the red. The consumer discretionary and technology sectors closed 1.2% lower, followed by a 0.9% decline in communication services sector. The heavy decline in those six sectors overshadowed the 2.9% gain in energy sector.
Tech bigwigs like Netflix, Inc.
NFLX
, Facebook, Inc.
FB
, Apple Inc.
AAPL
and Microsoft Corporation
MSFT
closed 2.5%, 2.2%,1.8% and 1.1% lower, respectively. A decline of 4.4% in shares of Atlassian Corporation Plc
TEAM
and more than 3% decline in shares of Tesla, Inc.
TSLA
, Peloton Interactive, Inc.
PTON
and MercadoLibre, Inc.
MELI
also weighed on the Nasdaq.
Overall, the S&P 500 posted 68 new 52-week highs and no new lows, while the Nasdaq Composite recorded 96 new highs and 32 new lows.A total of 9.50 billion shares were traded on Wednesday, lower than the last 20-session average of 11.27 billion.
Fed’s Beige Book Points Economic Progress at “Moderate Pace”
On Wednesday, a Federal Reserve survey, widely known as the Federal Reserve’s Beige Book survey of the economy showed that the U.S. economy grew at a faster pace from late February to early April as more companies sought to hire new workers. However, inflation also picked up and businesses had faced shortages in supply chain that are hindering production. The survey also pointed that progress on the vaccination front is also boosting the economy outlook.
Additionally, the Federal Reserve Chairman Jerome Powell also suggested yesterday that Fed would follow the same playbook it developed in 2013 and 2014 to reverse its asset-purchase program “well before” any interest-rate hike. And pledged to keep interest rates low in the near future.
Big Banks Reports Bumper Q1 Earnings
The S&P 500 financials sector was lifted 0.7% by stellar results on the first day of earnings season released by baking bigwigs like JPMorgan Chase & Co.
JPM
, The Goldman Sachs Group, Inc.
GS
and Wells Fargo & Company
WFC
on Wednesday.
JPMorgan reported first-quarter 2021 earnings of $4.50 per share surpassing the Zacks Consensus Estimate of $3.05. As per the earnings report, fixed income markets revenues increased 15%, driven by strong performance in securitized products and credit. Additionally, historically low rates drove mortgage fees and related income to $704 million, soaring 120%. However, the bank’s shares declined 1.9% yesterday. (
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)
On Wednesday, Goldman Sachs reported first-quarter 2021 earnings of $18.60 per share that overshadows the Zacks Consensus Estimate of $9.79. Q1 results were boosted by higher fixed income, currency and commodities client execution (FICC) revenues. Additionally, wealth management and consumer banking business treaded north reflecting rise in credit card loans. This banking giant closed 2.3% higher on yesterday’s session. (
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)
Wells Fargo also reported first-quarter 2021 earnings of $1.05 per share that surpassed the Zacks Consensus Estimate of 69 cents. Strong mortgage banking performance, improved trading and higher investment banking fees, and rise in asset-based fees in the wealth and investment management unit were the key to the bank’s better-than-expected performance in the reported quarter. On Wednesday, Wells Fargo’s shares added 5.5%. (
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)
Goldman Sachs flaunts a Zacks Rank #1 (Strong Buy), while both JPMorgan and Wells Fargo carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank stocks here.
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