Visa, Amex and Mastercard Push CE 100 Index Up 0.8% on ‘Resilient’ Spending

21.10.2024 11:00

PYMNTS.com

If there’s been a consistent theme thus far during earnings season, it’s that consumer spending has proven to be resilient across any number of demographics.

And as a result, for the CE 100 Index, banking and payments-related names (which, of course, rely on transaction volumes and the aforementioned consumer resilience), where Visa and Mastercard led the charge, helped underpin a 0.8% rally through the past week.

Wall Street’s sanguine attitude toward the two sectors this past week likely got a lift from retail sales data that came in above expectations for September, where consensus had looked for a 0.3% gain, month over month, and the official report came in at 0.4%.

Pay and Be Paid Names Lead the Way

The Pay and Be Paid segment of the CE 100 Index was 3.2% higher, as Sezzle soared 25%, ahead of earnings that are due to be released in early November.

Within that same segment, Visa shares gathered 4.6%. As PYMNTS reported this past week, Visa is teaming with littlefish, an omnichannel platform that helps financial institutions serve small businesses.

The partnership will support micro, small and medium-sized businesses across Africa by streamlining their in-store and online digital experiences, the companies said.

The solution is a platform that offers merchants payment solutions across traditional point-of-sale (POS) systems, mobile POS, Tap2Phone, and eCommerce channels while providing products and services designed to help merchants streamline their businesses and extend their market reach.

Mastercard shares gained 2.8%. PYMNTS reported that Mastercard introduced a tool that lets consumers control the sharing of their financial data. Connect Plus, the payment network said, exists as a “data command center” that lets consumers determine how, where and with whom their data is shared. Connect Plus lets users search for and link their bank accounts, see which third parties have permission to access account data, and grant and revoke consent in real time.

Resilient Consumer Spending

American Express, also within the payment-focused pillar of the CE 100 Index, complemented some of the sentiment from the banks these past several sessions, where earnings have taken note of the willingness of consumers to keep spending.

American Express was 0.4% higher through the week, as the company reported earnings that continued to detail how — and where — millennial and Gen Z consumers are spending their time and money.

The company’s earnings supplementals showed that consumer-billed business — the metric that represents cardmember spending tied to transactions and card advances — was up 6% year over year, as spending on goods and services matched that pace, as did spending on travel and entertainment.

Spending by millennials and Gen Z consumers — representing a third of the total spending — was up 12%, Amex noted, far outpacing the 6% growth seen with Gen X, and the flat spending tied to baby boomers.

During the conference call with analysts, Amex CEO Stephen Squeri said the Gold card is proving especially popular with those younger consumers, as 80% of U.S. Gold Cards acquired by the firms are tied to this consumer cohort.

“We know that millennials and Gen Zs are especially interested in dining,” Squeri said. “In fact, these younger card members transact almost two times more on dining … spending on restaurants continues to be one of our fastest growing T&E categories in our U.S. Consumer business.”

As a segment, banks were up 0.4%, holding the bulk of earnings reports through the week.

Citigroup’s earnings — though shares slipped 4.5%, giving up some of the year-to-date gains that had been approaching 30% — noted that credit card spending volume was up 3% year over year, according to company materials on branded cards, to $129 billion. CEO Jane Fraser said during the call with analysts that “while growth is a notch slower than last year, global economic performance continues to be surprisingly resilient. Whatever you want to call the U.S. landing, the sentiment around it is more optimistic, supported by the recent positive payrolls report. And we see a healthy yet more discerning U.S. consumer,” she said.

Signs of “stress,” she said, are “isolated” to lower FICO scoring consumers.

Goldman Sachs also weighed in with earnings, which sent shares up 1.2%; the company sees strength in its traditional Wall Street-facing business and continues to transition away from Main Street.

As for the Apple Card, in response to an analyst question about the future of that offering, CEO Solomon noted that “there’s a lot of focus on that. I think I think we’ve been pretty clear on our messaging that we are continuing to narrow our consumer footprint … I don’t have a lot more to say about where we are with Apple Card other than we’re running it, improving it … But I think the direction of travel at this point is pretty clear.”

Separately, as reported this week, Barclays U.S. Consumer Bank will become the exclusive issuer of General Motors’ GM Rewards Mastercard and GM Business Mastercard in the United States in the summer of 2025 and will acquire the card program’s receivables from Goldman Sachs next year.

Apple Pay was in the news, as Klarna’s flexible payment options are now available to eligible Apple Pay users in the United States and the United Kingdom. Options include pay later in three or four installments. The offering will be expanded globally, with Canada set to be added in the coming months. Apple shares gathered 3.3%, but the overall Enablers segment slipped 0.3%.

Pinduoduo shares sank 13.9% through the week, retracing some of its post-stimulus-package momentum that had boosted China-related names in general. The downdraft has come on the heels of a New York Times report from earlier in the month that contended that eCommerce companies (notably Pinduoduo) and deep discounting are making the country’s deflation worse. Pinduoduo’s slide brought the “Shop” segment of the CE 100 Index down by 2.8% this week.