New York (CNN Business)Goldman Sachs, one of the largest investment banks on Wall Street, reported results for the fourth quarter that easily topped analysts’ expectations Tuesday morning.
It’s yet another sign of the disconnect between the strength of the stock market and the struggles many average Americans face due to the coronavirus pandemic.
Shares of Goldman Sachs (GS) rose 2% after the earnings report was released. The stock is up nearly 15% in 2021 and is not far from its all-time high.
Goldman Sachs reported quarterly revenue of $11.74 billion, up 18% from a year ago. The company posted net income of $4.5 billion, a 135% surge from the fourth quarter of 2019.
The company reported record revenue from its investment banking unit, thanks to booming demand for initial public offerings and an increase in merger activity. Goldman Sachs also said it posted its best year for global markets revenue in a decade, largely due to strong trading volume for stocks, bonds, currencies and commodities.
Goldman Sachs chairman and CEO David Solomon said in a press release that “it was a challenging year on many fronts” and added that “we hope this year brings much needed stability and a respite from the pandemic.”
Still, the rally on Wall Street may be a case of stocks going up too far too fast. Solomon recently told Axios in an interview that he was worried about “some excess in the market.”
The latest numbers from Goldman Sachs follow strong earnings reports last week from JPMorgan Chase (JPM) and asset management giant BlackRock (BLK) as well as mixed results from Wells Fargo (WFC) and Citigroup (C). Bank of America (BAC) also reported earnings that beat forecasts but revenue that missed estimates on Tuesday.
“It’s a tale of two different cities,” said Mark Doctoroff, global co-head of financial institution coverage for MUFG, in an interview with CNN Business about bank earnings. “Corporate America is resilient and healthy but small businesses are hurting.”
Doctoroff noted that banks with more exposure to big businesses — ones that advise on mergers and initial public offerings — are doing well. But those with deeper ties to consumers and smaller local merchants have been hit harder by the Covid-19 pandemic and resulting economic slowdown.
Still, Goldman Sachs is planning a bigger move into consumer finance. The company runs the online banking company Marcus by Goldman Sachs, which offers loans and savings accounts.
And Goldman Sachs is looking to bolster Marcus further. Goldman Sachs announced last week it was partnering with card issuing company Marqeta, which Goldman Sachs has a stake in, to begin offering digital checking accounts to Marcus customers later this year.
Goldman Sachs also said last week that it is collaborating with MasterCard (MA) to issue General Motors (GM)-branded credit cards. Goldman Sachs is already partnering with Apple (AAPL) on the iPhone maker’s Apple Card.
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