On a day when most bank and financial stocks sagged, Goldman Sachs Group Inc.'s shares made a strong debut on the New York Stock Exchange Tuesday.
Goldman's stock, trading under the symbol GS, skyrocketed to a high of $77.25 before falling to $70 at the close.
The activity reflected investors' appetite for shares of the last of Wall Street's large investment banks to go public. In its initial public offering to privileged investors on Monday, postponed from last autumn, Goldman sold 69 million shares at $53 apiece, mostly to institutional investors, and raised $3.66 billion of capital as its own underwriter.
Buyers were ready to pounce at the market's opening, with the first trade driving up the stock price by 43%, to $76. They were probably emboldened by Goldman's record first-quarter profit of $1.19 billion as stock and bond rallies bolstered its trading, underwriting, and merger businesses.
Though the market indexes all fell Tuesday, analysts said the enthusiasm for Goldman was a positive sign for stocks. Monday, the Dow Jones industrial average closed above 11,000 for the first time.
"Overall, market sentiment over the industry is very optimistic," said Raphael Soifer, a financial services analyst at Brown Brothers, Harriman & Co. in New York.
But beyond the exuberance for Goldman, stocks of other brokerages retreated after Monday's big gains. Morgan Stanley Dean Witter was down 6.5%, to $98.0625, and Merrill Lynch & Co. dropped 6.88%, to $81.25
Analysts said Goldman, a leader in underwriting of Internet stocks, may be positioning itself for a foray into the retail Web brokerage business.
Though Goldman has said it will use the new capital for acquisitions and to compensate employees, many observers have wondered whether it would buy an on-line brokerage such as E-Trade or Charles Schwab & Co.
Internet trading "has broadened the marketplace," said Michael LeConey, technology analyst at Security Capital Trading Inc. in New York. "If you are going to be major player in the investment business, you are going to have to be a player in the Internet business."
Though investors are heady over Goldman's outlook, many observers said the company will face stiff competition in its core businesses.
The investment banking sector has started to undergo a transformation, with firms starting to offer stock directly to investors over the Internet. Last month Friedman, Billings, Ramsey Group of Arlington, Va., launched the Internet company FRB.com, which the firm is touting as an investment bank.
Elsewhere Tuesday, bank stocks mostly fell across the board, in part because of a weakened market for short-term Treasury securities, analysts said. The slackening demand for one-year notes put upward pressure on interest rates, prompting investors to unload bank shares.
The Standard & Poor's bank index declined 2.35%, to 712.26; the Dow Jones industrial average 1.17%, to 10,886.11.
Citigroup Inc.'s stock declined 3.67%, to $72.25; Bank of America Corp. 3.01%, to $70.4375; Chase Manhattan Corp. 0.6%, to $82.25; Bank One Corp. 3.75%, to $57.75; and J.P. Morgan & Co. 2.82%, to $133.50.