The Dow falls sharply as Wall Street’s big banks report declining profits

The Dow falls sharply as Wall Street's big banks report declining profits
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U.S. stocks closed mixed on Tuesday as Wall Street kicked off a shortened but busy week full of corporate earnings.

Dow Jones Industrial Average (^ DJI) was dragged down by banking stocks, followed by Goldman Sachs, down about 400 points, or about 1.1%.GS) posted its biggest gain in a decade. S&P 500 (^GSPC) shed 0.2% on the day, while the tech-heavy Nasdaq Composite (^IXIC) swelled to a modest 0.1%.

Goldman Sachs noted a larger than expected 69% decrease In its fourth-quarter earnings, the deal hit a significant decline in revenue and a higher provision for loan losses. Shares fell 6.5%.

Morgan Stanley (Mrs), meanwhile, reported smaller than expected decline in profit. Like its Wall Street peers, the firm’s investment banking operations took a hit, but higher net interest income and a record quarter for its wealth management business helped dampen overall numbers. Shares rose 5.8%.

Reports come later a weak round of quarterly updates from rivals at the end of last week.

Earnings reports from other sectors will also rise in the near future with United Airlines (UAL) report after closing.

Figures from Netflix (nflx) is also in the spotlight on Thursday. The update will likely serve as a potential sign of things to come for tech sector results, which will likely begin in earnest next week.

The S&P 500 is expected to report a 3.9% year-over-year decline in fourth-quarter earnings. Data from FactSet Research. This would be the first year-over-year decline in earnings reported by the index since a 5.7% decline in the third quarter of 2020.

“We expect earnings to take center stage ahead, where reactions to earnings are increasing while reactions to inflation/FOMC are decreasing,” Bank of America’s Savita Subramanian and Ohsung Kwon wrote in a note on Friday.

Traders work on the trading floor of the New York Stock Exchange (NYSE), New York, USA, January 5, 2023.  REUTERS/Andrew Kelly

Traders work on the trading floor of the New York Stock Exchange (NYSE), New York, USA, January 5, 2023. REUTERS/Andrew Kelly

There are global business leaders It gathers in the mountains of DavosThis week for Switzerland World Economic Forum. Global recession, post-pandemic challenges, climate change and the crisis in Eastern Europe are set to be high on the agenda for politicians, CEOs and billionaires. The President of the European Central Bank, Christine Lagarde, is among the participants.

Next week will also be Fedspeak, with several members of the US central bank making speeches around the country in the coming days.

U.S. Treasury yields rose on Tuesday, with the benchmark 10-year note up nearly 5 basis points to 3.55%.

Oil rose, with West Texas Intermediate Crude Oil (WTI) futures up 1.6% to $81 a barrel.

Tuesday’s moves came after a long weekend that saw the U.S. stock and bond markets watch Closed on Monday January 16th, in an observation by Martin Luther King Jr. Day. On Friday, all three major averages capped off his second straight winning week.

The tech-heavy Nasdaq Composite saw a whopping 4.8% gain for the week, while the S&P 500 and Dow Jones Industrial Average posted their best performance since November, posting weekly gains of 2.7% and 2%, respectively.

Alexandra Semenova is a correspondent for Yahoo Finance. Follow him on Twitter @alexandraandnyc

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