Block Inc. (NYSE:SQ)
The fintech company Block Inc. (NYSE:SQ) has had a bumpy week, with the stock price falling by more than 7% at around 11:20 a.m. ET on Friday and another 6.9% by 1:45 p.m. ET, to $69.50.
In early afternoon trade, the Dow Jones Industrial Average had down by nearly 650 points, the S&P 500 had fallen by 2.3%, and the Nasdaq Composite had dropped by 2.8%.
What’s the Reason?
On Friday, Block Inc. (NYSE:SQ) was affected by several different variables. Late Thursday night/early Friday morning, Reuters and other news outlets reported that Block and its Afterpay buy now, pay later company had severed ties with the Australian bank Westpac Banking Corp. Before now, Westpac bank customers could use the Afterpay app as part of the bank’s banking-as-a-service platform. However, Block has opted to stop using Afterpay at the bank and instead focus on expanding its Cash App service throughout Australia.
Lee Hatton, CEO of the Money by Afterpay app, told Reuters, “Our choice to move in this new route is due to our exciting next phase with Block Inc. (NYSE:SQ), particularly as we consider Cash App potential here in Australia.”
After Federal Reserve Board Chair Jerome Powell’s speech at the Fed’s Jackson Hole Economic Symposium, the market and Block Inc. (NYSE:SQ) shares began to plummet in the late morning and early afternoon.
What’s Next?
On Friday, Powell offered the hawkish perspective on decreasing inflation that the market had been expecting all week. As Powell put it, the Fed will “use its tools vigorously” to reduce inflation, so don’t hold your breath for a reduction in interest rates any time soon. And Powell admitted that it might hurt a little:
While the combined effects of higher interest rates, slower GDP, and weaker labor market conditions will reduce inflation, they will also cause some discomfort for consumers and companies. Unfortunately, they are the price we must pay to curb inflation. Unfortunately, failing to restore price stability would be much more severe.
A study released Friday by the U.S. Bureau of Economic Analysis (BEA) revealed a modest decrease in personal consumption expenditures (PCE) in July compared to June, which is a positive sign. This decreased from June’s 6.8% annual increase when the rate was 6.8%.
Stocks across the board, including Block Inc. (NYSE:SQ), fell on the more important news of Powell’s speech on inflation due to concerns over a potential economic downturn.
Featured Image: Megapixl @Selagin
Author Shariq Khan 
