IBD Stock Analysis
- Goldman Sachs cleared a 377.08 entry.
- Shares also set a new record high on Tuesday.
- The relative strength line is at its highest level since 2018.
Industry Group Ranking
Three Weeks Tight
* Not real-time data. All data shown was captured at
1:07PM EDT on
Goldman Sachs is the IBD Stock of the Day as the investment banking giant clears a base, amid a broader upswing among bank stocks as the economy recovers from the coronavirus pandemic.
The move higher for Goldman Sachs (GS) comes as the spread between short- and longer-term Treasury yields — or rates of return on government debt — got steeper Tuesday. The broader stock also market rose on Tuesday, helped by solid manufacturing data for May.
Following the release of the Institute for Supply Management’s monthly manufacturing gauge, which increased in May, the spread between the two- and 10-year yields hit the widest since May 21. Similarly, the spread between the five- and 30-year yields also hit the highest since May 21.
A steeper spread allows banks to borrow at lower rates and lend at higher rates, boosting earnings. Banks borrow on the short end of those yields and lend on the long end.
Fears of hotter inflation and wages have put upward pressure on longer-term yields. The Federal Reserve’s beige book report Wednesday and the Labor Department’s jobs report on Friday should provide more clues on inflation.
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Goldman Sachs Stock
Goldman Sachs stock rose 2.8% to close at 382.44 in the stock market today, clearing a three-weeks-tight pattern with a 377.08 entry. Shares are currently sitting at a new high.
The stock has a 98 Composite Rating out of a best-possible 99. Its EPS Rating is 92. The stock’s relative strength line is at its highest level since 2018.
Goldman Sachs in April reported first-quarter results that crushed analysts estimates. RBC analysts at the time said Goldman “continues to benefit from strong Trading and Investment Banking conditions with impressive 1Q21 results.”
“We expect GS to continue to drive its business model to be customer-centric, which should allow it to maintain its top-tier position as a ‘go-to’ global investment bank,” they continued.
CFRA analyst Kenneth Leon, who also covers Goldman Sachs stock, wrote in April that the bank was “executing on all cylinders with industry leading performance, and we believe the capital markets will remain very active in a low rate, risk-on environment from corporate issuers, M&A, and investors.”
However, some Federal Reserve policymakers have recently indicated they could pull back on measures to prop up the economy if the recovery continues.
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Other Bank Stocks
Along with Goldman Sachs stock, other bank stocks have also gained ground.
JPMorgan Chase (JPM), up 1.1% to 166.05, was also in a buy zone, after clearing a 161.79 buy point of a flat base. Citigroup (C), up 1.3% to 79.75, was within range of a 76.23 buy point of a flat base.
Morgan Stanley (MS), one of Goldman’s main rivals, rose 1.3% on Tuesday. That stock was extended from a cup base with an 86.74 buy point of a cup base.
Bank of America (BAC) rose 1.25% on Tuesday. Wells Fargo (WFC) added 1.2%.
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