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Trends & Analysis
News
Philips shares gain on Q4 results, job cuts
News
American Express shares rise despite earnings miss
News
Mastercard’s shares decline despite upbeat results
News
Tesla’s stock surges after upbeat Q4 print
News
Is there a golden opportunity with Shopify?
News
Investors unimpressed by Microsoft’s earnings beat

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Asset Watch

Goldman Sachs slashes headcount: could it boost the stock?

 

Tuesday, December 20, 2022

On Dec. 16, CNBC reported that Goldman Sachs could reduce its workforce by up to 8% in January. Pessimism has reduced the firm’s investment banking revenue, thanks to many stock markets stuck in bear markets, while M&A, IPOs and capital raises are on hold. As higher interest rates weigh on loan demand, the group’s structured finance division could also feel the pinch.
When the top line struggles, cost-cutting measures shore up the bank’s profitability. While the outgoing employees are less than enthused, shareholders often applaud the financial prudence.
So, while the FOMC’s hawkish messaging has the S&P 500 under heavy fire, is Goldman Sachs nearing a reversal?

Supporting the bull case, the stock sports a confirmed breakout above its declining resistance line (the grey line), and it’s normal to backtest the breakout before continuing the medium-term uptrend. Therefore, a retracement to roughly $330 may be in the cards, but development is constructive because the 200-day moving average ($328) is right near the backtest point, which adds another layer of support.

The 100-day MA ($341) is where the battle should begin, as the bulls will look to hold the key level. But, if risk-off sentiment dominates into year-end, the 200-day MA may be where the momentum reverses.

Should we view the headcount reduction as positive? Or do the layoffs signal something ominous about Goldman Sachs’ fundamental prospects in 2023?


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