By Bansari Mayur Kamdar and Johann M Cherian
(Reuters) – Wall Street rose on Wednesday, as investors looked past weak second-quarter earnings from Goldman Sachs, while taking comfort from strong profits of some of the smaller players in the sector.
Goldman Sachs added 1.6%, even after reporting a bigger-than-expected drop in quarterly profit on the back of a retreat from the Wall Street behemoth’s consumer businesses and declining investment values.
Big U.S. lenders rallied on Tuesday after they said higher interest rates had helped boost profits in the second quarter.
“Big banks have certainly set a positive tone for the start of Q2 reporting season,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
“Whether that translates into similar results for the rest of earnings season remains to be seen.”
The S&P 500 banking index added 1.5%, but was still down 1.8% 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 5.9%, while M&T Bank rose 3.0%.
US Bancorp reversed earlier losses and surged 4.6% as the Minneapolis-based lender posted a 28% jump in quarterly net interest income (NII).
The KBW regional banking index added 1.5%.
At 11:41 a.m. ET, the Dow Jones Industrial Average was up 155.95 points, or 0.45%, at 35,107.88, the S&P 500 was up 17.61 points, or 0.39%, at 4,572.59, and the Nasdaq Composite was up 62.48 points, or 0.44%, at 14,416.12.
The Dow was set for its eighth straight session of gains, its longest winning streak since September 2019.
Carvana jumped 35.4% 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 1.7% 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.
Results from Netflix and IBM later in the day are also on investors’ radar.
AT&T rose 7.9% after the telecom company said it does not intend to immediately remove lead cables from Lake Tahoe pending further analysis. Peer Verizon also added 5.4%.
Elevance Health advanced 5.1% and was among top gainers on the S&P 500 after the health insurer forecast an upbeat annual profit.
Halliburton shed 2.8% after posting disappointing quarterly revenue, while Baker Hughes edged up 0.5% after beating quarterly earnings expectations.
Advancing issues outnumbered decliners by a 2.01-to-1 ratio on the NYSE and by a 1.59-to-1 ratio on the Nasdaq.
The S&P index recorded 36 new 52-week highs and no new lows, while the Nasdaq recorded 117 new highs and 42 new lows.
(Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel)
