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Investment banking drives Goldman Sachs’ $5.5 billion profit as treasury yield tanks US stocks

Goldman Sachs has posted $5.5 billion profit amid the progressive economic recovery in the United States. The Dow Jones Industrial Average fell, meanwhile S&P 500 finished down after falling from intraday highs at Tuesday’s trading session. Later in the day, the Nasdaq composite ended negative. This downturn in the major index can be traced to rising yield.

Goldman Sachs’ Performance
Goldman Sachs, the investment banking behemoth, continues to stretch its tentacles across the market, reaping enormous profits in the process.

The bank posted a second-quarter net profit of about $5.5 billion, or $15.02 per share, on Tuesday. This was a significant increase over the $373 million earned in the same quarter a year ago, and handily outperformed experts’ expectations.

Goldman Sachs (GS) shares were down 2% in early Tuesday trading. However, the stock has increased by more than 40% this year, making it the Dow’s second-best performer for 2021.

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The reason behind Goldman Sachs’ profits
The Wall Street behemoth’s good earnings were driven by robust revenue growth in its investment banking division, which had its second-best quarter ever, and its asset management division, which had a record quarter. Overall revenue increased by 16% year over year to $15.4 billion.

Goldman Sachs has benefited from the stock market’s remarkable recovery. The bank’s merger consulting services are booming, and it is also raking in big bucks from initial public offerings and debt sales, as companies seek to borrow capital.

Quick market analysis
The stock sell-off intensified near Tuesday’s closing when the 10-year Treasury yield began to increase. It increased to 1.41% before falling to 1.401% at the time of writing this article.

Stocks fell early Tuesday after new data revealed that consumer prices had risen to their highest level since June 2008. The Consumer Price Index increased by 0.9%, almost twice as much as the average expectation of 0.5 percent. Prices also increased 5.4 percent year over year, which was more than the average estimate of 5%.

The Nasdaq ended the day with a 0.4% decline after hitting a new high of 14,803.68 earlier in the day. Furthermore, the S&P 500 index fell 0.3% after hitting a new high of 4,392.37. The Dow Jones Industrial Average dropped by 0.3%.

Meanwhile, Goldman Sachs was projected to report a 219% gain in net income year over year, despite sales falling 9%. The company ended up earning $15.02 per share on $15.39 billion in revenue, easily exceeding analysts’ expectations.

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