Wall Street losses as investors eye corporate results

LAST UPDATE 21:14

The New York stock market, although it started off with a strong rally on Monday after a fantastic session on Friday, turned marginally into negative territory, despite an earlier feeling of euphoria from profitable corporate results such as those from Goldman Sachs.

The Dow Jones industrial average recorded losses of 0.22%. The tech-heavy Nasdaq lost 0.20%, while the broader S&P 500 lost 0.30%.

Stocks edged higher on Friday, with the three major indexes posting gains of more than 1 percent, as investors shrugged off expectations of a full-point rate hike by the Federal Reserve. This allows investors to focus on corporate earnings. And they should be focused since 244 S&P 500 companies will report earnings in the next two weeks.

Already, companies are exceeding expectations. With nearly 10% of the S&P 500 capitalization reporting gains, earnings were 3.7% above estimates. However, one issue remains. While companies beat expectations last quarter, the future may be more challenging. With interest rates rising and voices warning of a recession growing louder, it seems likely that earnings estimates will have to be lowered. Earnings expectations for the S&P 500 for 2022 have risen over the year, but have now fallen 0.3% in the past month, according to FactSet.

Goldman Sachs stock, for example, gained 3.5% after the company reported better-than-expected earnings. Goldman Sachs Group reported a drop in second-quarter profit as deals fell, weakening the Wall Street giant’s investment banking business. The bank reported earnings of $2.8 billion, or $7.73 per share, for the quarter ended June 30, down from $5.3 billion, or $15.02 per share, a year ago, a decline 48%, lower than expected.

Shares of Bank of America posted gains on Monday after the bank posted mixed second-quarter results but said net interest income could rise as much as $1 billion next quarter. With IPOs on hold and businesses hitting the brakes on trading, Bank of America’s investment banking fees fell 47% to $1.1 billion in the quarter. Profit fell to $5.93 billion, or 73 cents a share, for the quarter to June 30, from $8.96 billion, or $1.03 a share, a year ago.

Shares sensitive to digital assets rallied, with shares in Coinbase Global ( COIN ) rising 6.3%. MicroStrategy ( MSTR ), a software group with significant Bitcoin holdings on its books, gained 5.9%, while digital payments groups Block ( SQ ) and PayPal ( PYPL ) gained 2.3% and 1.1%, respectively. Bitcoin miners Marathon Digital ( MARA ) and Riot Blockchain ( RIOT ) gained 7.1% and 7.2% respectively.

Shares of WD-40 (WDFC) gained 3.5% after being upgraded to Buy from Neutral at DA Davidson & Co.

JPMorgan Chase stock gained 0.8% after being upgraded to Hold from Sell at Berenberg.