The Dow Jones Industrial Average climbed on Wednesday, shrugging off a negative rating for one of its components, Goldman Sachs (GS), as investors awaited inflation data and earnings reports from major banks later this week. Meanwhile, Coinbase (COIN), the largest cryptocurrency exchange in the U.S., saw its shares slide as bitcoin dropped below $45,000.
Goldman Sachs, one of the leading investment banks in the world, faced a downgrade from BMO Capital on Wednesday, which lowered its rating from outperform to market perform, with a price target of $357. BMO Capital cited concerns over the bank’s valuation, growth prospects, and regulatory risks as the reasons for its bearish outlook.
Goldman Sachs, which is scheduled to report its fourth-quarter earnings on Friday, along with other big banks such as JPMorgan Chase (JPM), Bank of America (BAC), Citigroup ©, and Wells Fargo (WFC), saw its shares fall by nearly 1% in morning trading, extending its losses from the previous session. The stock is still trading above its cup-base buy point of $361.62, which it cleared last week.
Coinbase Struggles As Bitcoin Dives
Coinbase, the most popular platform for buying and selling cryptocurrencies in the U.S., suffered a 4.2% drop in its share price on Wednesday, as the price of bitcoin, the largest and most influential digital currency, plunged by more than 3% in the past 24 hours. Bitcoin, which hit an all-time high of over $69,000 in November, has been on a downward trend since then, amid regulatory crackdowns, environmental concerns, and increased competition from other cryptocurrencies.
Coinbase, which went public in April 2021, has been highly volatile and correlated with the movements of bitcoin and other digital assets. The company, which reported strong third-quarter results in November, is facing increasing competition from rivals such as Robinhood, PayPal, and Square, as well as regulatory scrutiny from the Securities and Exchange Commission (SEC) and other authorities.
Dow Jones Rises Ahead Of Inflation Data
The Dow Jones Industrial Average, the oldest and most widely followed stock market index in the U.S., rose by 0.2% on Wednesday, outperforming the S&P 500, which gained 0.1%, and the Nasdaq Composite, which rose by a fraction. The Dow Jones, which consists of 30 large-cap companies from various sectors of the economy, was boosted by the gains of some of its components, such as Caterpillar (CAT), Merck (MRK), and Amgen (AMGN).
The Dow Jones, along with the broader market, is awaiting the release of the consumer price index (CPI) data for December, which is expected to show a 7% year-over-year increase in inflation, the highest level since 1982. The CPI data, which will be announced on Thursday, will have a significant impact on the market sentiment and the expectations for the Federal Reserve’s monetary policy. The Fed, which has been tapering its bond-buying program and signaling interest rate hikes in 2022, is facing pressure to combat the rising inflation and support the economic recovery amid the ongoing pandemic.
