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Strength Seen in Goldman (GS): Can Its 5.7% Jump Turn into More Strength?

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Goldman Sachs (GS - Free Report) shares soared 5.7% in the last trading session to close at $383.47. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.4% gain over the past four weeks.

After 11 interest rate hikes, the Fed's decision to pause rate hikes for the third month drove bullish sentiments across markets amid the optimism of easing inflation pressures. With this, the interest rates remain at a 22-year high of 5.25-5.5%. Further, the central bank indicated three interest rate cuts by 2024-end. These developments turned investor sentiment bullish on finance stocks, as high funding costs faced by the industry players are expected to decline in the next year, supporting spread income and margins. Hence, the GS stock gained.

This investment bank is expected to post quarterly earnings of $5.29 per share in its upcoming report, which represents a year-over-year change of +59.3%. Revenues are expected to be $11.06 billion, up 4.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Goldman, the consensus EPS estimate for the quarter has been revised marginally lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on GS going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Goldman is a member of the Zacks Financial - Investment Bank industry. One other stock in the same industry, Piper Sandler Companies (PIPR - Free Report) , finished the last trading session 3.3% higher at $175.19. PIPR has returned 10.4% over the past month.

For Piper Sandler Companies, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $2.59. This represents a change of -22.2% from what the company reported a year ago. Piper Sandler Companies currently has a Zacks Rank of #3 (Hold).


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