By Geoffrey Smith
Investing.com -- U.S. stock markets edged higher at the opening on Wednesday, as a raft of broadly positive bank earnings reports reassured investors that the U.S. economy isn't about to deteriorate dramatically even in the absence of a stimulus package from Washington.
Goldman Sachs (NYSE:GS), PNC Financial (NYSE:PNC) and US Bancorp (NYSE:USB) all reported earnings well ahead of expectations in the third quarter, with Goldman in particular catching the eye after a stellar result from its bond and currency traders. Goldman stock still only rose 0.8%, while PNC stock rose 1.1% and USB stock rose 2.1%.
Two other big name banks to report were less fortunate. Wells Fargo (NYSE:WFC) stock fell 3.2% and Bank of America (NYSE:BAC) stock fell 2.6%, despite the fact that both more or less met consensus forecasts. Analysts were unsettled by a drop of nearly 20% in income from their core lending businesses, a result of the Federal Reserve's slashing interest rates to zero in response to the pandemic. The Fed has since indicated that it intends to leave rates at zero for some time after inflation climbs above 2% - which it shows little sign of doing at present.
Earlier, Federal Reserve vice-chairman Richard Clarida said that the U.S. economy remained in a deep hole and will need time to climb out, "perhaps another year" in the case of GDP, and perhaps three years for the unemployment rate.
"Additional support from monetary - and likely fiscal - policy will be needed," Clarida said.
By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was up 60 points, or 0.2%, at 28,639 points, while the S&P 500 was up 0.4% and the Nasdaq Composite was up 0.6%. All three had snapped a four-day winning streak on Wednesday.
Sentiment was helped by Apple (NASDAQ:AAPL) rebounding from its relatively weak performance on Tuesday, when it launched four new iPhone models. The phones - the first with 5G capability - may not be able to make their new features count for much in the U.S. market in the immediate future, due to the limping rollout of 5G networks by the country's carriers.
Elsewhere, Concho Resources (NYSE:CXO) stock rose 11% after Bloomberg reported that ConocoPhillips (NYSE:COP) is preparing a bid for the company. The deal would greatly strengthen Conoco's position in the Permian shale basin in Texas, the most economically attractive of all the U.S. shale basins in an environment of low prices. ConocoPhillips stock rose 1.1%, on anticipation of a reasonably low-risk bet on growth. Even at this morning's prices, Concho is still trading some 40% below its pre-pandemic level.