U.S. Stocks Rise on Solid Bank Earnings; Cryptocurrencies Look for a Catalyst

U.S. stocks continued higher on Wednesday, with the Dow rising triple digits after a blowout earnings report from Goldman Sachs. Cryptocurrencies were mostly directionless after Ethereum delayed its planned Constantinople upgrade due to security risks.

Stocks Rise

All of Wall Street’s major indexes finished in positive territory. The Dow Jones Industrial Average climbed 141.57 points, or 0.6%, to 24,207.16. The broad S&P 500 Index advanced 0.2% to 2,616.10, with financials leading the way higher. The Nasdaq Composite Index recorded a gain of 0.2% to finish at 7,043.70.

Goldman Sachs Group Inc. (GS) was the Dow’s best performer after reporting much better than expected earnings and revenue for the fourth quarter. The investment bank reported per-share earnings of $6.05 on revenue of $8.08 billion. Analysts had called for an EPS of $4.45 on $7.55 billion in sales.

Bank of America Corp (BAC) also rose after reporting a better than expected quarter. The bank beat expectations on the top and bottom lines and tripled its profit to $7.3 billion.

Brexit Uncertainty

Global financial markets were surprisingly calm in the wake of a devastating Brexit vote for British Prime Minister Theresa May, who failed to pass her proposed legislation on Tuesday. Lawmakers voted overwhelmingly against the proposed Brexit deal, setting the stage for a new round of negotiations with Brussels.

However, some members of British Parliament want Prime Minister May to step down or call a general election. The opposition Labour party pushed for a vote of no-confidence on Wednesday, which if passed, would have set the stage for a general election. The motion was rejected late Wednesday.

Under May’s proposed deal, the United Kingdom would embark on a soft Brexit in roughly two months’ time. It’s not entirely clear whether that timetable is still feasible given the latest setback in parliament.

Day 26 of the Government Shutdown

The longest government shutdown in U.S. history entered its 26th day on Wednesday, fueling uncertainty about the direction of the economy. With roughly 800,000 federal workers affected by the impasse, some analysts are beginning to worry about the potential impact on economic growth.

The latest Quinnipiac poll shows the majority of Republicans still support the shutdown because of its implications on border wall funding. President Donald Trump has been adamant that he will not cave unless Democrats make appropriations for a steel barrier on the U.S.-Mexico border. The president has warned that the shutdown could go on for “months or even years” if Democrats don’t agree to fund the wall.

With no solution in sight, attention has turned to Senate Republicans, some of which have grown frustrated with the shutdown. If enough of them defect, it could force a vote on a new measure to re-open the government.

Ethereum Hard Fork Postponed

The planned implementation of the Constantinople hard fork was delayed on Wednesday after developers identified a major vulnerability in one of the Ethereum Improvement Proposals (IEPs).

Smart contract auditor ChainSecurity on Tuesday uncovered a major issue with EIP 1283, which proposes net gas metering changes for the SSTORE opcode and new uses for contract storage. According to ChainSecurity, implementing the EIP 1283 would give attackers a loophole to steal funds.

The delayed launch of Constantinople was made official on Ethereum’s official Twitter: “Constantinople upgrade is temporarily postponed out of caution following a consensus decision by #Ethereum developers, security professionals and other community members. More information and instructions are below.”

At the time of writing, no alternative timetable has been provided. More on Constantinople: ETH/USD Price Analysis: Ethereum’s “Thirdening” Approaches.

Crypto Markets Gyrate

The cryptocurrency market saw little movement on Wednesday, as bitcoin held within a narrow range and most of the major altcoins exhibited lower volatility. The value of all coins in circulation dipped slightly to $121.6 billion despite the presence of stable volumes.

Bitcoin edged down 0.1% on the day, reaching $3,642.89. The largest cryptocurrency by market cap experienced a large bounce at the beginning of the week but has faced strong resistance near $3,700.

Learn why we believe 2019 could be the year of accumulation for bitcoin.

Ethereum had posted the biggest percentage drop in the top 20 before paring losses later in the session. EH was last down 0.6% at $122.86.

On the opposite side of the spectrum, Cardano gained 4.2% to $0.0445. Binance Coin rose 3% to $6.10. EOS added 1% to $2.43.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi