By Sruthi Shankar and Ankika Biswas
(Reuters) – The S&P 500 index was little changed on Tuesday as a drop in Goldman Sachs’ profit dampened optimism about resilience in the banking sector, with gains in technology stocks helping keep the index afloat.
Goldman Sachs Group Inc dropped 2.5% after its quarterly profit fell 19%, hit by sluggish dealmaking and losses from the sale of some loans from its consumer unit Marcus.
Bank of America Corp slipped 0.6% in choppy trade even as its first-quarter profit beat analysts’ estimate. The wider banking index was down 0.2%.
Johnson & Johnson fell 2.6% as the healthcare conglomerate’s 2023 profit forecast was seen as cautious by several analysts.
“We expect earnings to really be stressed. It’s all kind of this slow motion fall into a recession and that earnings recession is really kind of the next shoe to drop,” said Brandon Pizzurro, director of public investments at Guidestone Capital Management.
Investor expectations were buoyed by strong results from big banks including JPMorgan Chase & Co last week in the backdrop of the recent banking turmoil sparked by the collapse of some mid-sized U.S. lenders.
The CBOE Volatility index, also known as Wall Street’s fear gauge, edged up to 17.15 after hitting an over one-year low earlier.
Graphic – VIX hits more than 1-year low
https://fingfx.thomsonreuters.com/gfx/mkt/lbvggwerbvq/vix.PNG
The main Wall Street indexes have traded in a tight range since earnings season kicked off but remain close to two-month highs on expectations that the Fed is nearing the end of its monetary tightening cycle.
Mixed economic data recently has supported bets the Fed will hike interest rates by 25 basis points in May and hit pause before cutting rates in the second half of the year.
St. Louis President James Bullard said that the Fed should continue raising rates as recent data has indicated sticky inflation, while the broader economy seems poised to continue growing, even if slowly.
At 10:12 a.m. ET, the Dow Jones Industrial Average was down 121.20 points, or 0.36%, at 33,865.98, the S&P 500 was up 1.79 points, or 0.04%, at 4,153.11, and the Nasdaq Composite was up 16.03 points, or 0.13%, at 12,173.75.
Nvidia Corp jumped 4% after HSBC upgraded the chipmaker’s stock to “buy” from “reduce”, surprised by its pricing power on artificial intelligence (AI) chips.
Investors will monitor quarterly earnings from Netflix Inc after market hours.
Lockheed Martin Corp rose 2.9% after quarterly results of the U.S. weapons maker’s surpassed Wall Street targets as simmering geopolitical tensions fueled demand from both domestic and international customers.
Advancing issues outnumbered decliners by a 1.07-to-1 ratio on the NYSE, while decliners outnumbered advancers by a 1.18-to-1 ratio on the Nasdaq.
The S&P index recorded 23 new 52-week highs and no new low, while the Nasdaq recorded 41 new highs and 36 new lows.
(Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Sriraj Kalluvila and Vinay Dwivedi)
