US stocks maintain record pace

The Wall Street debut for Coinbase Global (COIN) Wednesday could turn out to be a seminal event for the burgeoning industry tied to cryptocurrencies and the blockchain.

"Coinbase is ushering in the third wave of the internet," said Ian Balina, CEO and founder of cryptocurrency investment research firm Token Metrics.

Balina notes that Amazon (AMZN) and Google owner Alphabet (GOOGL) in the late 1990s and early 2000s marked the first wave of online commerce and advertising; the rise of Facebook (FB), Twitter (TWTR) and Snapchat (SNAP) in the 2010s helped launch the second big digital thrust via social media.

And he says Coinbase represents the next internet revolution: decentralized finance.

To that end, eToro — an online broker that competes with Robinhood and has a big crypto-trading arm — has already announced plans to go public through a blank check merger. Balina expects Coinbase rival Kraken may look to go public too.

He added that he's not worried about Coinbase's eye-popping valuation of nearly $100 billion on its first day of trading, comparing naysayers to those who doubted the market potential for Tesla (TSLA). He thinks Coinbase is "undervalued for the long-term."

Anton Chaschin, managing partner of prime trading with cryptocurrency exchange CEX.IO, agreed that the Coinbase direct listing is a "big validation" for the industry — and that more crypto stocks will likely follow Coinbase to Wall Street.

It's just over an hour into the trading day, and Wall Street's fortunes have turned.

After a resoundingly boring and mostly flat open, all three major indexes are now trading higher.

The Dow is up 0.6%, or 215 points, while the broader S&P 500 has climbed 0.2%. The Nasdaq Composite is up 0.1%.

Energy and financials stocks are leading the way, helped by higher oil prices and solid bank earnings.

Bernard Madoff, whose name became synonymous with financial fraud, died while serving a 150-year sentence in Federal Prison. He was 82 years old.

His death Wednesday at the Federal Medical Center in the prison in Butner, North Carolina, was confirmed by the US Bureau of Prisons. A cause of death was not released.

In February 2020, he petitioned the courts for an early release from prison, stating that he had terminal kidney failure and a life expectancy of less than 18 months. But the US Attorney's office for the southern district of New York said Madoff's crime was "unprecedented in scope and magnitude" and is "sufficient reason" to deny Madoff's request.

Madoff was the mastermind behind a $20 billion Ponzi scheme -- the largest financial fraud in history.

Read more about Madoff here.

Earnings season has arrived and Wall Street kicked off mostly flat with only the Nasdaq Composite rising at the opening bell.

Some of America’s major banks, JPMorgan (JPM), Goldman Sachs (GS) and Wells Fargo (WFC), reported earnings before the market opened. Profits rose thanks to a combination of favorable conditions in the market, the release of reserves and lower allowances for loan losses. The economic recovery was underway, the banks said in their statements, even though risks remained.

The shares of JPMorgan and Wells Fargo slipped at the open, while Goldman stock rose slightly.

Investors are also awaiting a speech by Federal Reserve Chairman Jerome Powell, who will address the Economic Club of Washington, DC, at noon.

Happy days are here again on Wall Street — and that's great news for investment banking powerhouse Goldman Sachs.

Shares of Goldman Sachs (GS) were up about 4% in early trading Wednesday after the company reported results for the first quarter that easily topped Wall Street forecasts. Goldman Sachs said revenue more than doubled compared to Q1 of last year, to $17.7 billion. The company posted a profit of $6.8 billion.

Goldman Sachs is benefiting from the boom in the stock market and resulting surge in dealmaking activity on Wall Street. The company said it posted a record quarter for revenue in its asset management business as well as for its equity underwriting unit, the division that helps companies go public through initial public offerings (IPOs) and trendy special purpose acquisition company (SPAC) transactions.

CEO David Solomon said in the earnings release that the company is helping clients “in preparation for a world beyond the pandemic and a more stable economic environment."

Goldman Sachs shares are now up nearly 30% this year, making it one of the best performers in the Dow. Rival JPMorgan Chase (JPM), which is also in the Dow, and Wells Fargo (WFC) also reported strong earnings Wednesday. But their stocks dipped on concerns about consumer loan growth.

Wells Fargo’s bottom line grew sharply in the first quarter as the resurgent economy eased worries about bad loans. But the bank struggled with subdued interest rates and weak demand for new loans.

Net income surged to $4.7 billion during the first three months of 2021, skyrocketing from just $653 million a year ago. Per-share profit of $1.05 easily beat estimates.

Why the big jump? Much of the credit goes to a $1.6 billion decrease in Wells Fargo’s allowance for credit losses because of “continued improvements in the economic environment.” In other words, the bank was able to cut sharply its cushion for bad loans.

Wells Fargo (WFC) also benefited from the absence of losses linked to its fake-accounts scandal and other legal troubles. In 2020 alone, Wells Fargo reported $2.2 billion in customer “remediation" costs.

It wasn't all great news, however. Wells Fargo’s net interest income, a key driver of profitability, tumbled 22% in the first quarter on low interest rates and “soft demand” for loans. Commercial loans slumped 19%, while consumer lending was down 8%.

Wells Fargo CEO Charlie Scharf said the results reflected an “improving US economy,” but acknowledged “low interest rates and tepid loan demand continued to be a headwind for us."

For years, Wall Street turned up its nose at America's bank stocks. Now, the sector is getting tons of love as investors eye the economic recovery, which is set to benefit big lenders.

What's happening: The KBW Bank Index (BKX) has jumped almost 25% this year, while the broader S&P 500 has risen 10%. And analysts think shares of companies in the industry have even further to run.

Golub thinks there are numerous reasons earnings could beat expectations, fueling more market momentum.

First is the economic recovery, which is expected to support lending activity. People have been racing to take out mortgages to buy homes, while businesses need capital as they make plans for a post-Covid world. Concerns that customers wouldn't be able to make good on loan payments have receded.

Read more about why bank stocks are hot again here.

Earnings season is underway, and the first signs are positive.

JPMorgan (JPM), America's biggest bank measured by assets, reported $14.3 billion in net income in the first three months of the year, or $4.50 per share. That was up from the fourth quarter net income of $12.1 billion, and nearly five times higher than the net income reported in the same period last year.

The bank's profit was boosted primarily by $5.2 billion of credit reserves it stopped hanging onto as the economy improved and JPMorgan stopped worrying so much about customers defaulting on their loans.

The strong performance was "partially driven by a rapidly improving economy," CEO Jamie Dimon said in the earnings statement.

Despite the better-than-expected performance, the low-interest-rate environment is still leaving its mark on the bank: Net interest income dropped 11% to $13 billion between January and March.

"Home Lending originations were very strong, up 40%, [...] but we expect this to slow with the recent rise in interest rates," Dimon said.

JPMorgan stocks was down 0.7% in premarket trading.

The bank will hold a conference call to discuss its performance later this morning.

US stock futures continue to plod along slowly – albeit in record territory. Stocks hit new records Tuesday, although the Dow slipped because it was weighed down by Johnson & Johnson. That trend continued Wednesday. 

Here's where things stand as of 6:15 am ET: