Goldman Sachs results beat forecasts despite bond trading hit

Revenue from underwriting and companies turning to Goldman's investment bankers for advice both increased during the quarter.

USA banking giant Goldman Sachs has reported a fall in third-quarter profits following a further fall in bond trading revenue.

UnitedHealth jumped 4.4 percent, lifting the Dow and the S&P the most, after the largest US health insurer's profit beat estimates and it raised full-year earnings forecast.

Goldman Sachs and Morgan Stanley beat estimates for the third-quarter, sending their stocks up 1.18% and 1.59% respectively.

Goldman's bond trading results were of particular interest because it is more dependent on trading than rivals and it does not have a significant retail operation to offset recent declines.

Tuesday's results follow the strong performances by JPMorgan, Citibank, Bank of America and Wells Fargo, which all posted earnings beats last week.

Goldman's bond-trading division has seen three consecutive quarters of declines as a result of low volatility in the market for trading fixed income, commodities and currencies.

Oct 17 (Reuters) - Wall Street opened flat on Tuesday as gains in healthcare stocks were largely offset by losses in financials, with an earnings beat from Goldman Sachs failing to cheer investors.

In notes to clients early on Tuesday morning, a handful of analysts predicted the market would consider Goldman's earnings beat less impressive because it was fueled by such a volatile business.

"Don't call it a come back", Evercore ISI analyst Glenn Schorr titled a note to clients about Goldman's results.

Net income rose 11 percent to $1.69 billion. The Smith Barney brokerage the bank acquired from Citigroup almost nine years ago is now consistently delivering at least half of Morgan Stanley's revenue.

Goldman's return on common equity, a measurement of a bank's profitability by showing how well it performs with the assets on its books, was 10.9 percent in the quarter.

However, the 26% drop in bond trading revenue was smaller than expected, following a slump of 40% in the second quarter.

Meanwhile, Morgan Stanley reported earnings per share of $US0.93, ahead of estimates of $US0.81 per share.

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