Dow, S&P 500 eye tepid open as GS slides after quarterly results

By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) -The Dow and the S&P 500 were set for a muted open on Wednesday after Goldman Sachs (NYSE:GS) reported second-quarter results, while investors also assessed strong earnings from a number of smaller banks.

Goldman Sachs eased 1.4% in volatile premarket trading after the Wall Street giant posted a fall in second-quarter profit as it took a writedown tied to its GreenSky business and the investment banking business was hit by lower dealmaking volumes.

Big U.S. lenders rallied on Tuesday after they said higher interest rates had helped boost profits in the second quarter.

“We’ve got a lot of the majors out of the way and they’ve been pretty good so far. This (Goldman) is probably the first hiccup,” said Dennis Dick, market structure analyst at Triple D Trading.

The S&P 500 banking index has fallen 3.4% this year in the aftermath of a banking crisis that took down three lenders and pummeled the regional banking sector.

The benchmark S&P 500 index has notched an 18.6% gain in the same period.

Among other lenders, Citizens Financial (NYSE:CFG) and M&T Bank (NYSE:MTB) beat Wall Street estimates for second-quarter profit, benefiting from the U.S. Federal Reserve’s rapid rate hikes.

Citizens Financial edged lower, while M&T Bank rose 2.4%.

At 8:39 a.m. ET, Dow e-minis were up 2 points, or 0.01%, S&P 500 e-minis were up 1 points, or 0.02%, and Nasdaq 100 e-minis were up 31.25 points, or 0.2%.

Carvana jumped 38% after the troubled used-car retailer struck a deal with most of its term bondholders to cut its outstanding debt by more than $1 billion.

Tesla (NASDAQ:TSLA) rose 0.7% ahead of results expected after the bell. Its strategy to boost sales through price cuts is likely to have powered its strongest revenue growth in five quarters while dragging down margins to a three-year low in the April-June period.

The electric carmaker will kick off the earnings season for megacap growth and technology companies whose outsized gains have driven the tech-heavy Nasdaq up 37.2% so far in 2023.

Credit Suisse raised its year-end target on the benchmark S&P 500 to 4,700 from 4,050, citing a decline in the near-term U.S. recession risk and a stronger earnings outlook for the largest technology-related companies.

Results from Netflix (NASDAQ:NFLX) and IBM (NYSE:IBM) later in the day are also on investors’ radar.

Shares of Microsoft (NASDAQ:MSFT) edged 0.5% higher, a day after the Windows-maker hit an all-time high on announcing it would charge more to access new artificial intelligence features in its Office software.

AT&T (NYSE:T) rose 5.6% after the telecom company said it does not intend to immediately remove lead cables from Lake Tahoe pending further analysis. Peer Verizon (NYSE:VZ) also added 3.4%.

Elevance Health advanced 5.5% after the health insurer forecast upbeat annual profit.

VMware (NYSE:VMW) added 7.6% after UK’s competition regulator provisionally cleared Broadcom (NASDAQ:AVGO)’s $69 billion deal to buy the cloud service provider.

Meanwhile, a Reuters poll showed economists expect the Federal Reserve to raise its benchmark interest rate for the last time for the current cycle by 25 basis points on July 26.