CE100 Index Plunges 7.2% as Higher Interest Rates Cloud Spending Outlook

It’s getting to be a familiar refrain: The CE100 names move, in a big way, to the downside.

All pillars slid, and depending on where you look, only a few stocks wound up ending the week in the green. As for the gainers, K12 was up 2.1%, followed by Landstar, up 1.2% — and many of the names, whether they moved up or down, moved without much in the way of headlines.

The PYMNTS ConnectedEconomy 100™ (CE100) Index lost 7.2%, far outpacing the broader indices, including the Nasdaq, which lost a relatively tame 4.8%.

CE100 Relative Performance

Source: PYMNTS

Ah, but even in the absence of headlines …

In a week where the Federal Reserve boosted its benchmark rate yet again in a super-sized, 75-basis-point leap, it might be a small wonder that the “Shopping” segment was down 10.4% on the week.

In the stock market, as they say, perception is reality. Using this past week’s performance as a barometer, the current perception is that there are enough headwinds out there that the consumer’s penchant to spend will be challenged — and that’s putting it mildly.

Higher rates make everything more expensive, when it comes to the debt that’s already in place — and it makes new financing, like auto loans and mortgages, tougher to handle.

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Leading the decline was Vroom, which plummeted by 23%. Although there wasn’t any company-specific news released in tandem with the drop, used car prices have been easing a bit, per data from the Commerce Department in its Consumer Price Index. At the same time, used vehicle sales are dropping.

The wild card is how all of this might affect the car-buying platforms — and if consumers pull back, full-throttle, on big-ticket purchases, the challenges for Vroom (and others) would be considerable.

Ocado was close behind Vroom’s dismal performance, with a 21.5% loss, which follows the company’s disclosure this month that it expects to see a “small sales decline” in the current financial year.

Meanwhile, MercadoLibre slid 11.3%, where the only news in recent days, per Bloomberg, is that the company will look to double its electric delivery-vehicle fleet in the region to over 1,000 by the end of the year.

The “Have Fun” pillar lost nearly 10%. In this segment, DraftKings was 19.5% lower, followed by LiveNation, which declined 13.9%. We would contend that worries about the consumers’ mindset (and wallet) might well be affecting stocks such as these, where disposable income may be less disposable.

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To that end, a similar read across would bedevil the “Pay and Be Paid” sector, which lost more than 8%. Affirm was a notable decliner here, off 13% on the week, as buy now, pay later (BNPL) names continue to be pressured by the specter of continued regulatory scrutiny.

And in Affirm-focused news, the company’s BNPL offerings, available to Amazon customers in the United States, will soon be offered to the retailer’s customers in Canada.