Goldman Sachs Group (NYSE:GS) stock dropped 1.93% on November 19. Shares hit a 52-week low of $197.35 on the same day as all three major U.S. indexes suffered over 1.5% declines. The stock is now down 15.7% year over year.
Bank stocks have struggled in 2018 in the face of record profits on the back of the U.S. Tax Cuts and Jobs Acts which was enacted in December 2017. The market priced in these gains by the end of 2017, which has prevented top flight earnings report from generating the momentum investors crave.
Goldman Sachs released its third-quarter results on October 16.
Revenues rose 4% year-over-year to $8.7 billion and net income surged 19% to $2.5 billion. Both beat consensus estimates. Goldman’s investment banking arm posted revenue of $1.7 billion which was up 12% from the prior year. Investing and lending revenue fell 1% to $1.9 billion.
Goldman is poised to finish the year strong, but the market is a tough sell to investors right now. In the future it is likely we will be looking back on a lost year, and there are concerns going forward.
Tax reform has provided a jolt in the arm, but earnings will be measured against the new environment next year and investment is expected to slow.
The International Monetary Fund and World Bank have also forecast growth to hover around 2% for the United States as we enter the next decade. Of course, rising rates are also having a negative impact on investor sentiment and market liquidity.
Goldman’s business is strong, but investors should prepare themselves for more volatility in U.S. markets in the coming quarters.
