Dow Jones and S&P500 Reach New Highs as Bitcoin Soars to Record

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Principal Points

• Dow Jones lifted by Goldman Sachs as the bank reported strong Q1 results
• Bitcoin neared $65,000 on Wednesday, boosted by renewed buying momentum

Investors went through one of the busiest days yesterday as events were coming in from stocks, cryptocurrencies, earnings reports, one big direct listing, and a speech from the Fed Chairman. Driven by a strong appetite for real-economy stocks, the Dow Jones Industrial Average rose as much as 234 points to set a new all-time intraday high. A solid earnings report by Goldman Sachs also helped push the blue-chip index to a record high as the first-quarter earnings reporting season kicked off with blowout profits.

Goldman Sachs, JPMorgan, and Well Fargo reported first-quarter results on Wednesday before the opening bell. Goldman Sachs Group shares rose 2.3%, boosted by sharply higher profits as consumer spending and investment banking soared in the first quarter on the back of an economic recovery and a turbocharged market. JPMorgan and Wells Fargo also posted record-high figures that beat expectations.

The Dow Jones could not sustain the session gains as the buying momentum fizzled out. The 30-stock index closed positive by 53.26 points, or 0.16%, at 33,730.89. Market participants broadly sold technology shares on Wednesday, causing the tech-focused Nasdaq Composite to slide by 138.26 points, or 0.99%, finishing the session at 13,857.84. The S&P500 was also dragged lower by tech shares. The broad-based index hit an all-time intraday high level earlier in the session but ended the day down by 16.93 points, or 0.41%, at 4,124.66.

Coinbase: Crypto Goes Public

All three benchmark indexes float right below their all-time highs as investors remain optimistic that the recovery of the economy will be swift and powerful. The positive outlook is driven by the sizeable government stimulus measures and the Federal Reserve’s commitment to keeping supporting the economy with monetary aid. In addition, the pace of reopening is increasing as the vaccination campaign rolls out across the states. Meanwhile, Federal Reserve Chairman Jerome Powell appeared for a virtual interview with the Economic Club of Washington. Mr. Powell said the central bank is considering unwinding some part of its bond purchases “well before” raising interest rates. He also reiterated Fed’s position to leave interest rates unchanged this year and allow the economy to progress, even if it means higher inflation. On that note, the Federal Reserve is comfortable seeing inflation “moderately” above 2% in 2021.

Meanwhile, the first official junction between traditional financial markets and the emerging crypto space took place yesterday. Coinbase, the largest cryptocurrency exchange in the US, entered the realm of publicly traded companies through its direct listing on the Nasdaq Global Select Market. Coinbase is the first major crypto company to go public. Shares started trading at $381 and rose as high as $429.54. By the end of the day, gains evaporated and the stock closed at $328.28.

The company chose not to go the traditional way for going public by an initial public offering (IPO). Instead, Coinbase selected a direct listing, which saves money they would otherwise pay to investment banks in an IPO. Companies that do direct listing don’t raise any money in the process. Instead, investors sell their existing shares to the public, as opposed to issuing new shares.

Against that backdrop, Bitcoin reached a new historical top. The world’s largest digital asset traded as high as $64,850. The token has been shattering records in the past couple of days, boosted by increased demand. Currently, bitcoin’s price has eased from its highs and is trading around $62,800.