CE 100 Index Slips 2% as Bank Earnings Spark Decline

Earnings season has begun, and at least initially, investors seemed nonplussed. Despite resilient consumer spending, inflation’s sticky too — and pressures are evident in the CE 100 Index, especially on lower-income households.

Banking names led the headlines, as the group was down by 4.1% through the week.

The Banks Weigh In

J.P. Morgan shares were 7.4% lower. As PYMNTS reported in the wake of earnings, consumers are still spending, according to J.P. Morgan CEO Jamie Dimon. But inflation bears watching.

And “persistent inflation pressures,” as he termed them, among other factors, will be unpredictable.

As Dimon stated in the earnings release, “we have never truly experienced the full effect of quantitative tightening on this scale. We do not know how these factors will play out, but we must prepare the firm for a wide range of potential environments.”

J.P. Morgan reported that net charge-offs tied to its card services segment stood at 3.3%, up from 2.1% a year ago. The data shows that debit and card sales volumes were up 9% year on year, to $420 billion.

CFO Jeremy Barnum, later in the call, noted at least some pressure on some consumers, adding that “the extra money of the lower-income folks [is]…normalizing, as you see credit normalizing a little bit.”

Citigroup lost 3.1%. As noted in the most recent earnings results, and similar to what had been seen with J.P. Morgan, there was continued spending on credit cards — but there were some notes of caution in the mix. The earnings materials detailed that branded card-related volumes were 4% higher year on year in the March period.

CEO Jane Fraser said that the bank is seeing “healthy spend growth persist in branded cards, primarily driven by our more affluent customers. Across both portfolios, increased demand for credit continues to drive strong growth in interest earning balances.” But, “while they’re only a small part of our portfolio, we are keeping an eye on the customers in the lower FICO band,” she said.

Non-conforming loans as a percentage of average loans were 3.7% of branded cards in the first quarter, up from about 2.2% a year ago.

Non-Banking Names Decline, Too

Porch Group lost 15.4% and iRobot lost 11.2%, both helping to bring the Live segment of the CE 100 Index down by 5%.

Porch announced this past week that it had debuted product enhancements and price increases in its inspection software business. Inspection Support Network, the company said, is a SaaS solution for inspectors. Along with other Porch inspection brands, the company said that they processed approximately 40% of all U.S. home inspections in 2023.

FlexFund, which provides customers the opportunity to pay for inspection services at the closing of the real estate transaction, and can increase average inspection revenue by 30%, the company said.

iRobot shares sank after Amazon CEO Andy Jassy said in CNBC reports that the jettisoned bid to buy iRobot — blocked by regulators — represents “kind of a sad story,” in his words. He said that regulators blocked the deal “because they worry that we’re going to feature our vacuum cleaner, the Roomba, vs. others, which of course is not our model.”

Among the names that made some gains, Coupang rose 16.6%. Sites including the Korea Times reported that the company is raising its Wow paid membership fees by 58%.

Fastly was 8.9% higher. Earlier in the month, as we noted, Fastly launched a tool to help companies combat bot attacks. Fastly Bot Management is designed to help clients prevent fraud, distributed denial of service (DDoS) attacks, account takeovers and other online abuse.

The tool automatically identifies and stops malicious bots that conduct fraudulent activity, like account takeover and carding attacks.

Apple was ahead by 4.1%, helping blunt the Enablers segment’s losses to 0.7%, the smallest losses in our pantheon. As reported here, Apple Cash cards now have virtual card numbers, enabling users to securely spend their Apple Cash at merchants that don’t accept Apple Pay.