Banks Sidestep CE100’s Slide, Investors Seek Defensive Names in Healthcare

To find the bright spots in a dismal week and to find where investors have been finding at least some safe haven, look toward the banks.

And a few isolated names in shopping, and the defensive plays in health — no matter how the economy fares, people still get sick and still need to get treated.

Group by group: In a week that saw the overall Connected Economy 100 Index (CE100) slide by 3.5%, the banking pillar was the lone positive performer, up about 3%.

In an environment of rising rates, and in the wake of earnings results where tech names were hurt — in a volatile week where the index was off 1.5% — it might make sense that banks might represent a flight to relative safety. After all, rising rates have not hit lending yet, which means that interest earned on loans will be higher, and so will net interest margins.

To that end, names like Citigroup were up 7.1%, and Ally Bank gained 4.8%. Additionally, J.P. Morgan Chase surged 3.7%.

In company-specific news tied to those names, Citi unveiled Single Euro Payments Area (SEPA) Instant Payments in Europe, its latest instant payments offering. The company said its launch will allow clients to pay to and receive funds from 36 SEPA countries instantly.

See also: Citi Debuts SEPA Instant Payments in Europe

There are signs investors are also looking toward some relief in defensive names, particularly in healthcare, where McKesson and Aetna were up mid- to high- single digits (the “Be Well” was up about 10 basis points on the week).

However, on the other end of the spectrum, the “Shop” group slipped by more than 8%, the “Work” pillar was off 5.5% and payments slumped during the week to end down, as a group, more than 5.2%.

In that shopping pillar — ironically, noted above as the hardest-hit group — well, that’s where you’d find the top-performing stock in the entire index, surging more than 10% on the week in the wake of earnings.

As PYMNTS noted after Pinterest released its first-quarter results, the social platform is putting commerce at the center of 2022 growth plans.

CEO and co-founder Ben Silbermann broke down Pinterest’s emerging strategy to make the platform more shoppable — a trend seen from Meta and others in the space trying to make up for ad dollars lost to Apple’s recent iOS data privacy changes. The company is using a three-pronged strategy for shopping; Silbermann said it began with a verified merchant program and moved into more advanced product upload catalog capabilities.

Related: Pinterest Makes Itself More Shoppable as Platform Positions Commerce to Pick up Ad Slack

That performance was not enough to boost the shopping sector, however, dragged down in part by slides in names like Cognex, down 19.7% ahead of earnings this week.

CE100 Relative Performance

Source: PYMNTS

Though there is continued evidence that payments continue to see a secular shift, the fact that the pay-and-be-paid names are off 5% in the past five sessions belies at least some skepticism over sustainable growth rates.

Block/Square stands out here. Head Jack Dorsey and Chief Financial Officer Amrita Ahuja told analysts that in the wake of its January acquisition of Afterpay, the firm’s latest results indicate that buy now, pay later (BNPL) is helping generate repeat consumer transactions and increased conversion for sellers.

In integrating Afterpay’s BNPL functionality with the Square Online and eCommerce application programming interface (API) in the U.S. and Australia, roughly 13,000 Square merchants adopted and processed BNPL sales through the first quarter.

Read more: 13,000 Square Merchants Logged BNPL Sales in Q1