Goldman Q3 beats sending shares higher, while Wells Fargo disappoints
Goldman Sachs' Q3 earnings beat the street, sending shares higher while Wells Fargo's quarterly earnings fell short of analysts' expectations. IG's Victoria Scholar takes a look at the chart of GS ahead of the US market open.
Shares in Goldman Sachs are trading higher on the IG platform in the pre-market session after the Wall Street giant reported a 94% jump in quarterly profit, topping analysts’ expectations, thanks to strength in its bond trading and less-than-expected credit loss provisions. Overall trading revenue rose 29%, with bond trading up 49% to $2.5 billion. Earnings per share hit $9.68 versus $4.79 in the same period last year and above forecasts for $5.57, according to Refinitiv. Loan loss provisions fell from $1.59 billion in the third quarter of last year down to $278 million year-on-year.
Meanwhile Wells Fargo & Co shares are under pressure ahead of the open after third quarter profit fell 57% as lowered interest rates from the Federal Reserve weighed on the banks’ net interest margins. Net income hit 42 cents a share, down from 92 cents a share in the same period last year. Net interest income fell $512 million quarter-on-quarter and total revenue dropped by 14%.
Goldman Sachs: technical analysis
Taking a look at the chart of Goldman Sachs, having bottomed after the first quarter global market sell-off, the stock tried to recover but stumbled into resistance at the 76.4% Fibonacci retracement level in June and once again in July. The trough from September, which saw the stock briefly trade below the 50% fib line marked the low and GS shares have since been trading in a consistent ascending trendline which puts it on track to test the 76.4% fib line as the next resistance level to watch. The recent rally has been supported by the RSI which has also seen higher highs and is inching close to the key 70 level, which would act as an indication that the shares are starting to look overbought. Much of the price action since June has seen the stock coalesce around the 61.8% fib level, which is likely to be the next key support level to watch on the downside. A break below might negate some of the recent positive streak.
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