After yesterday's selloff, stocks opened higher in anticipation of additional rate cuts by the Fed later today. Better-than-expected quarterly earnings from Goldman Sachs Group Inc. (NYSE: GS) relieved investors who have been dealing with a lot of negative news lately in the financial sector.

The world's largest investment bank reported this morning that its first-quarter profit dropped 53% to $1.47 billion. The company's quarterly numbers were dragged down by higher writedowns and lower fees from investment banking. Deterioration in the credit markets came with $1 billion in losses related to residential mortgage loans and securities and nearly $1 billion in losses on credit activities.

But despite its deep losses, Goldman Sachs managed to beat analysts' predictions, helped by stronger asset management and commodities performance. The company posted first-quarter profit per share of $3.23 per share, down from $6.67 per share reported in the same period a year ago. Analysts, on average, expected the company show quarterly earnings of $2.58 per share.




The global crisis in the credit market put pressure on the investment bank's revenue which plunged to $8.33 billion, compared with $12.73 billion a year earlier. However, this was enough to top analysts' forecast for $7.47 billion in revenue, according to Thomson Financial.

Investors enjoyed the company's strong earnings, especially after rival firm Bear Stearns Cos. (NYSE: BSC) failed. As a result, Wall Street pushed the stock higher over 8% in early trading trading.

Meanwhile, Lehman Brothers Holdings Inc. (NYSE: LEH) reported better-than-expected quarterly results even though they were dismal. Net income fell 57% to $489 million, or 81 cents per share, beating analysts' estimates of 72 cents. Revenue dropped 31% to $3.5 billion, ahead of consensus forecasts of $3.35 billion.


Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.