Fintech stocks have had a crazy day. As a couple of banks published better-than-expected quarterly results this week, shares of Upstart Holdings (NASDAQ:UPST), PayPal Holdings (PYPL), and SoFi Technologies (SOFI) stocks opened the trading day with solid increases.
However, by mid-afternoon, investors had reversed course and wiped all of the stock’s early gains virtually when Philadelphia Federal Reserve President Patrick Harker said that “we are going to be hiking rates for a while” to combat sky-high inflation.
So, what’s the deal?
Investors began the day bullish, citing the most recent quarterly results from Bank of New York Mellon, Bank of America and Goldman Sachs, which were reported earlier this week. Each bank outperformed Wall Street’s consensus projections for their individual quarters, resulting in a widespread feeling of market confidence and, in particular, financial equities.
This morning, investors were buoyed by news that Netflix, IBM, and AT&T all outperformed consensus projections for their most recent quarters. Stocks rose early in the trading day due to solid financial statements from significant corporations in two industries – but the celebration didn’t last long.
In his statement, Harker also said that there had been a regrettable lack of progress in bringing inflation back down. He expects the Fed to maintain interest rates high for a time after it has finished raising them “to allow monetary policy to do its thing.”
As of 3:11 p.m., the S&P 500 was down 0.6%, and the tech-heavy Nasdaq Composite was down 0.4% due to those remarks. Consequently, E.T. Upstart, PayPal, and SoFi lost steam as investors started to worry that aggressive interest-rate rises would inflict too much harm to the economy and perhaps spark a serious recession.
Many investors now anticipate 75 basis points will be added to interest rates by the Fed. at its November meeting and maybe again at its December meeting.
So, what now?
The wild ride fintech stock investors had today is another indication that the market remains unpredictable. While the stock price oscillations for Upstart, PayPal, and SoFi are likely to continue, this does not imply that these firms are terrible long-term investments. However, it does imply that investors’ patience will be taxed as they cling to these companies.
Shareholders will better understand each company’s performance when the third-quarter results are released on Nov. 1 for SoFi, Nov. 3 for PayPal, and Nov. 8 for Upstart.
Featured Image – Megapixl © Wutzkoh
Author Okoro Chinedu 
