Dow rises to intraday record, Nasdaq edges lower, as big bank earnings top expectations

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U.S. stocks are mixed Wednesday, off the session highs, as the Federal Reserve’s Beige Book pointed to a moderate pace of economic growth, but a slight inflation uptick in 2021.

Investors also were focused on financial powerhouses JPMorgan Chase, Wells Fargo and Goldman Sachs, which kicked off the first-quarter earnings season by beating expectations.

The other key focus was the public listing of crypto exchange Coinbase Global which comes as prices for bitcoin the world’s most prominent crypto, were heading to records.

How are stock benchmarking trading?

  • The Dow Jones Industrial Average rose 96 points, or 0.3%, to 33,778, after hitting an intraday record of 33,911.25.
  • S&P 500 fell 11 points, or 0.3%, to 4,130, after flipping negative
  • Nasdaq Composite slid 105 points, or 0.8%, to 13,889.
  • The Russell 2000 was up 1.2%.

On Tuesday, the Dow fell 68.13 points to end at 33,677.27, a decline of 0.2%. However, the S&P 500 climbed 13.60 points, closing up 0.3%, to a record 4,141.59, its 21st of the year; The Nasdaq Composite Index rose 146.10 points, or 1.1%, finishing at 13,996.10, a mere 0.71% from its Feb. 12 record close. The Nasdaq-100 index also finished at a record on Tuesday.

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What’s driving the market?

Stocks are trading mostly lower Wednesday, after the Federal Reserve’s Beige Book survey of economic activity pointed to a ‘moderate pace’ of accelerating U.,S. economic activity to start the year, but also to a slight uptick in inflation.

The Beige Book survey also pointed to progress on the vaccination front as provided a boost to the economy outlook.

The report comes as investors were poring over first-quarter reports from JPMorgan Chase Goldman Sachs Group and Wells Fargo & Co. on Wednesday to gauge what soaring profit at several of the nation’s financial powerhouses might mean for the broader economic.

All three major U.S. financial institutions that reported results Wednesday revealed rising profit and a reduction in reserves, or the cushion banks set aside for potential losses from souring loans. The Financial Select Sector SPDR Fund which tracks the performance of U.S. banks, was up 1.2%.

“We are getting a flavor of what’s to come,” said Yung-Yu Ma, BMO Wealth Management’s chief investment strategist, of ramped up earnings and profit by big banks. “We think that continues for bank earnings and it is something we think probably lasts for the rest of this year.”

Ma also thinks there’s a lot of economic momentum behind earnings in the broader corporate landscape, but will be tuning in closely during analysts call for clues as to “which companies have pricing power.”

“It’s going to be uneven across the economy,” he told MarketWatch.

Also in focus Wednesday is the direct listing of Coinbase, the biggest U.S. crypto-exchange, on the Nasdaq. Shares were pegged to open around $380.05 a piece, for an implied valuation of about $99 billion.

“I knew that Coinbase would be a big event,” said Anthony Denier, CEO of Webull, a trading platform popular with individual investors. “But I think everyone is surprise by how it’s taken over [the focus] of the market,” he said. “Running a retail brokerage, my customers are fully focused on Coinbase right now.”

And while bank shares haven’t been a focus among his traders for some time, Denier said early quarterly results point to a “feasting moment” for big banks, thanks to the surge in IPOs, SPACs and other capital market activities during the pandemic.

“The first quarter is a story very much about great expectations. So far, companies are delivering on aggregate here,” Michael Reynolds, investment strategy officer at Glenmede Trust told MarketWatch, though he cautioned only a few companies had reported.

Meanwhile, Federal Reserve Chairman Jerome Powell on Wednesday suggested the Fed would follow the same playbook it developed in 2013 and 2014 once it decides to reverse its asset-purchase program, meaning a tapering of asset purchases would come “well before” any interest-rate increase, during a speech at the Economic Club of Washington.

In other economic data, the U.S. import price index increased 1.2% in March, and 0.8% stripping out for fuel prices. Economists polled by Dow Jones and The Wall Street Journal had forecast 0.9% increase.

Which companies are in focus?

  • Coinbase Global one of the first cryptocurrency exchanges to go public, saw shares pop on their debut Wednesday, lending the exchange a value above $100 billion.
  • Shares of JPMorgan Chase & Co. fell 1.3% Wednesday, after CEO Jamie Dimon noted loan demand would remain “challenged” even as the banking giant reported first-quarter profit and revenue that beat expectations.
  • Dollar General CorpDG said Wednesday that it aims to hire up to 20,000 people at in-person and virtual hiring events that the discount retailer will host from April 19 through April 23.
  • Jack in the Box Inc. JACK disclosed Wednesday that it will be “separating” from Andrew Martin, who has been the fast food chain’s chief information officer since November 2016, effective May 7.
  • Shares of Goldman Sachs Group Inc.rose 2.9% Wednesday after the bank and brokerage company reported record profit and revenue that beat expectations.
  • Wells Fargo & Co.  posted stronger-than-expected profit and revenue for the first quarter, boosted by the release of $1.6 billion in its reserves for credit losses. Shares of Wells Fargo rose 5.2%.
  • Bed Bath & Beyond Inc. stock dropped 9.9% after the home goods retailer reported fourth-quarter earnings that beat expectations, but fell short on sales.

How are other assets faring?

  • The ICE U.S. Dollar Index  a measure of the currency against a basket of six major rivals, was down 0.2%.
  • U.S. crude for May delivery  rose 4.9% to $63.16 a barrel on the New York Mercantile Exchange.
  • The 10-year Treasury note yield  was up a basis point to 1.64%. Bond prices move inversely to yields.
  • Gold futures finished higher, with the June contract  falling 0.7% to $1,736 an ounce.
  • In Europe, the Stoxx 600 index SXXP rose 0.2%, while London’s FTSE 100 UKX added 0.7%.
  • In Asia, the Shanghai Composite SHCOMP gained 0.6%, Hong Kong’s Hang Seng HSI closed up 1.4%, and Japan’s Nikkei 225 NIK fell 0.4%.

Mark DeCambre contribute reporting

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