Wall Street earnings come in strong, turning markets bullish

Wall Street just brought the fireworks, and the markets are loving it. Major U.S. banks like Goldman Sachs, JPMorgan Chase, Wells Fargo, and Citigroup delivered blockbuster earnings, blowing past expectations and sending their stock prices higher.

Add inflation data that turned out to be better than feared, and you’ve got investors riding a wave of bullish momentum. Goldman Sachs set the tone with profits that were more than double.

The bank posted a jaw-dropping $11.95 per share in earnings on $13.87 billion in revenue, smashing analyst expectations of $8.22 per share and $12.39 billion.

JPMorgan wasn’t far behind, delivering $4.81 per share in profit and $43.74 billion in revenue, easily topping the $4.11 per share and $41.73 billion predicted by analysts.

Wells Fargo earned $1.42 per share, beating Wall Street’s forecast of $1.35, and Citigroup swung back into profitability with earnings of $1.34 per share on $19.58 billion in revenue.

All this good news wasn’t just limited to earnings reports. Inflation data provided a huge boost to the market’s confidence, sending stocks, bonds, and even crypto soaring.

Inflation eases, markets rally

The December Consumer Price Index (CPI) report showed inflation rising 2.9% over the last year, exactly what economists had predicted. Core inflation, which strips out volatile food and energy prices, eased to 3.2%, down from 3.3% in November. On a monthly basis, the CPI rose 0.4%, in line with forecasts.

This was music to investors’ ears. Benchmark Treasury yields dropped sharply, with the 10-year yield falling to 4.686%, making growth stocks more attractive.

The Dow Jones futures shot up 695 points, or 1.6%, while the S&P 500 and Nasdaq 100 futures gained 1.6% and 1.8%, respectively.

Bitcoin surged from $96,000 to $98,400 after the CPI report and was flirting with $99,034 by Wednesday night, marking a 7% gain over two days.

Ethereum and other altcoins followed the trend, while the CoinDesk 20 index, which tracks the broader crypto market, climbed 5%.

Wall Street’s winners and surprising movers

It wasn’t just the big banks basking in the glow of earnings season. BlackRock, the world’s largest asset manager, reported $11.93 per share in profit on $5.68 billion in revenue, exceeding Wall Street estimates of $11.19 per share. Its stock jumped 3.7% in response.

Quantum computing stocks had their own moment after Microsoft unveiled its Quantum Ready program. Rigetti Computing surged 8%, D-Wave Quantum skyrocketed 17.5%, and IonQ added 4.8%. The promise of a “reliable quantum computing era” clearly got investors hyped.

Even real estate stocks saw gains. Digital Realty Trust climbed 1.7% after Deutsche Bank upgraded the stock, citing increasing demand for data centers as leases expire. Tesla and Nvidia also rallied, with shares up 3.2% and 1.7%, respectively, as investors poured back into growth stocks following the drop in Treasury yields.

Coinbase, a proxy for crypto sentiment, gained 6%. Bitcoin-related stocks like MicroStrategy and Marathon Digital each rose about 5%, reflecting the bullish mood in the crypto sector.

Bitcoin and Wall Street: A growing connection

Bitcoin’s recent rally highlighted its strengthening ties to the broader financial markets. The flagship cryptocurrency has been moving in sync with the S&P 500, thanks in part to the rise of Bitcoin ETFs that brought institutional money into the space.

But Bitcoin’s correlation with traditional safe-haven assets like gold has dropped. Since December, the crypto asset has behaved more like a tech stock than a hedge against volatility.

The market’s optimism wasn’t without its hiccups. Federal Reserve Chair Jerome Powell’s warning about inflation back in mid-December spooked investors, briefly pulling Bitcoin below $90,000. Bond yields spiked, and riskier assets took a hit.