CE100 plunges 7.2% as interest rates rise

It’s becoming a familiar refrain: CE100 names are moving, dramatically, downwards.

All the pillars slipped and, depending on where you look, only a few stocks ended the week in the green. As for winners, K12 rose 2.1%, followed by Landstar, up 1.2% – and many names, whether up or down, moved on without too many headlines.

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

Relative performance CE100

Source: PYMNTS

Ah, but even in the absence of headlines…

In a week the Federal Reserve again raised its benchmark rate in a jump of 75 basis points, it’s perhaps no wonder that the “Shopping” segment fell 10.4% on the week.

In the stock market, as they say, perception is reality. Using last week’s performance as a barometer, the current perception is that there are enough headwinds to test the consumer’s penchant for spending – to put it mildly.

Higher rates make everything more expensive, in terms of debt already in place, and it makes new financing, like auto loans and mortgages, harder to manage.

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Leading the decline, Vroom fell 23%. Although no company-specific news was released alongside the decline, used car prices fell slightly, according to data from the Commerce Department in its Consumer Price Index. At the same time, sales of used vehicles are falling.

The wildcard is how all of this could affect car-buying platforms – and if consumers fully retreat on large purchases, the challenges for Vroom (and others) would be considerable.

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

Meanwhile, MercadoLibre slipped 11.3%, where the only news in recent days, by Bloomberg, is that the company will seek to double its fleet of electric delivery vehicles in the region to more than 1,000 by the end of the year.

The “Have Fun” pillar lost almost 10%. Within this segment, DraftKings was down 19.5%, followed by LiveNation, which was down 13.9%. We think worries about consumer sentiment (and wallet) may well affect stocks like these, where disposable income may be less available.

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To that end, a similar cross-read would jeopardize the “Pay and Be Paid” sector, which lost more than 8%. Affirm was a notable decline here, down 13% on the week, as the 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.

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