Updated from 9:57 a.m. EST

Goldman Sachs Group

(GS) - Get Report

reported Tuesday that its first-quarter earnings rose 67% because of trading and underwriting gains, becoming the second Wall Street firm this week to handily exceed analysts' expectations.

Goldman also said it would buy back as much as 15 million shares of the firm's common stock.

Goldman's shares jumped 4 13/16, ot 4.2%, to close at 118 1/4 Tuesday. The stock had initially fallen on the news in a brief round of profit-taking, but quickly recovered.

On Monday,

Lehman Brothers

( LEH) reported first-quarter

TST Recommends

earnings that more than doubled, beating Wall Street's estimates.

Morgan Stanley Dean Witter

( MWD) is expected to report its financial results later this week.

For the first quarter ended Feb. 25, Goldman said it earned $887 million, or $1.76 a diluted share, compared with $532 million, or $1.12 a share, a year earlier. Figures for last year are on a pro forma basis, taking into account the firm's conversion from a partnership to a corporation in the second quarter of 1999.

Analysts polled by

First Call/Thomson Financial

had been expecting $1.48 a share in the latest quarter.

Net revenue rose 50% to $4.493 billion from $2.988 billion a year ago.

The largest revenue increase was $625 million in commissions for asset management and securities services, a rise of 91% on record transaction volumes and increased gains from merchant banking funds.

A close second was an 89% rise to $858 million in revenue from equities. Like Lehman Monday, this segment was exceptionally strong because of favorable conditions in the global equity markets that resulted in higher transaction volumes, especially in Europe, and increased customer flow in equity derivatives. Bond trading stood at $1.016 billion, a 16% increase over the year before and a 145% increase over the last quarter. That was a surprisingly mammoth swing, given rising interest rates.

Investment banking activity stood at $1.236 billion, up 37% from a year earlier but down 5% from the fourth quarter. Even so, underwriting activities -- on the strength of IPOs for Internet-related companies -- posted a 72% revenue gain and merger and acquisition advisory posted a 12% gain.