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The general losses in the stock market were cushioned by bank shares after their better-than-expected earnings releases.
The United States stock market on Wednesday recorded a mixed session result as gains in bank shares helped prevent a broader market freefall. The S&P 500 Index (INDEXSP: .INX) dropped 0.41% lower to 4,124.66 after hitting a new high in volatile trading. The Dow Jones Industrial Average (INDEXDJX: .DJI) added 53.62 points atop a 0.16% gain to close the session at 33,730.89. The Nasdaq Composite (INDEXNASDAQ: .IXIC) pared off some of its gains from earlier in the week, dropping 0.99% to 13,857.84.
Coinbase Global Inc (NASDAQ: COIN) impressed investors on its first trading day as it closed 31.31% higher to $328.28. This close was however marked by a sharp drop from its intraday high above $424.
The mixed trend was fueled by a broad sell-off in tech stocks. Electric automaker Tesla Inc (NASDAQ: TSLA) dropped 3.95% to $732.23. Facebook Inc (NASDAQ: FB) slipped 2.24% to $302.82 while e-commerce giant Amazon.com Inc (NASDAQ: AMZN) fell 1.97% to $3,333.00. The trio of Netflix Inc (NASDAQ: NFLX), Apple Inc (NASDAQ: AAPL), and Google’s parent company Alphabet Inc (NASDAQ: GOOGL) all dropped 2.48%, 1.79%, and 0.56% respectively.
Bank Stock Prevented Market Freefall
The general losses in the stock market were cushioned by bank shares following the better-than-expected earnings releases. Per its stellar first-quarter performance fueled by its equities trading and investment banking units, Goldman Sachs Group Inc (NYSE: GS) soared 2.34% to $335.35 on Wednesday.
“The first wave of Q1 big bank results look pretty much as strong as most analysts had expected – even stronger actually,” said JJ Kinahan, chief market strategist at TD Ameritrade. “It’s possible that we’re in a powerful market that’s in a forgiving mood when it comes to bad news. The path of least resistance for stocks continues to seem to be to go higher, with the market climbing a wall of worries that just doesn’t go away.”
Wells Fargo & Co (NYSE: WFC) complimented the bank rally with its shares closing up 5.53% to $41.99 after it also released a good Q1 earnings report.
Fed Chair Jerome Powell on Interest Rates
The Federal Reserve Chairman Jerome Powell has hinted at the possibility of reducing the bond purchases in advance of its plausible hiking of the interest rate. Addressing the Economic Club of Washington, he noted:
“We will reach the time at which we will taper asset purchases when we have made substantial further progress towards our goals from last December. That would in all likelihood be before, well before, the time we would consider raising interest rates. We have not voted on that order but that is the sense of the guidance.”
The potentials for the interest rate hike stems from the aggressive vaccination programs geared up to usher in a return to economic and social normalcy.