Per usual, big banks were first out of the gate in releasing third-quarter earnings reports last week. Many more reports will come this week and beyond, meeting a mix of gathering macro-economic headwinds and consumer resolve.
Banks like J.P. Morgan, Citigroup and Wells Fargo reported increases in debit and credit card spending; but then again, loan loss reserves were boosted.
The banking pillar wound up being the best performer of the pillars we track, gaining a bit less than 1% on the week.
The remaining segments lost ground, most notably the Shopping sector, which plunged more than 8%. Losses here were enough to overwhelm the bank gains, sending the overall Index lower than the broader benchmarks.
J.P. Morgan stands out as a bellwether to the cross-currents that are in place. As we noted in this space, J.P. Morgan’s results show there is some dwindling of the cash cushion that gives some breathing room for consumers, and, specifically, paycheck-to-paycheck individuals.
Deposits in the company’s consumer and community banking segment stood at $1.174 trillion, down roughly 1% from the previous (second) quarter. Commentary on the call noted that spending has been growing faster than income — debit and credit card sales volume was up 13% year on year to $395.8 billion.
CEO Jamie Dimon said there “are uncertainties” as to where consumer and small- to medium-sized business (SMB) savings and spending might be headed.
Shopping Names Decline
No surprise, then, that in the same week that saw inflation come in an elevated 8% pace, investors would send shopping-related names lower. The more things cost, of course, the less money there is to go around.
Pinduoduo lost 16.7%. The company has recently debuted its U.S. online shopping site. Also, with shares listed in the U.S., there’s the opportunity for U.S. investors to weigh in directly with their concerns over the initiative through which the platform offers low-priced daily necessities and home textiles. Peloton was 16.7% lower on the week, giving up some of the gains that it had seen in the wake of a slew of partnership announcements.
Pinterest slipped by nearly 15%, and we’ll know more when the company releases results late this month. But in the meantime, in company-specific news, Pinterest has partnered with Headspace to add new tools for managing stress, increasing positivity and sleep and more, a company news release said. Hundreds of thousands of eligible creators will now be able to get a free subscription with the mindfulness company.
Work-related names slipped, as a group, by 5.7%.
Fiverr lost about 13%. Gig economy platforms had a rough week of it on the heels of news that the U.S. Department of Labor is proposing new rules that could help gig workers be classified as employees instead of independent contractors.
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