CE100™ Index Climbs 2.8% as Block, Mercado Libre Rally

Call it the great stock market rebound of 2022: U.S. stocks rallied from record lows last week after investors looked past Russia’s attack on Ukraine.

PYMNTS’ CE100^TM Index climbed 2.8% last week, after shedding 10 points on Wednesday. The S&P 500 and Nasdaq, meanwhile, recovered from their previous losses to finish higher, and the Dow, which recorded its worst day of the year, climbed back up 1.8%.

Payment technology and consumer stocks led the rebound for the CE100 Index, even as key travel stocks saw a significant decline.

Fig 1. Market indexes’ performances during the week of Feb. 22

CE100^TM Index Top and Bottom Performers of the Week

PYMNTS assessed the stock prices of all CE100 Index companies between Feb. 21 and Feb. 25, 2022, to identify the top and bottom performers of the week. Here’s what we found:

• Block: Shares of Square’s parent company rose 27.4% after the company’s Q4 earnings, net revenue and gross payment volume topped analysts’ estimates, making it the top performer on the CE100 Index. The growth in the company’s stock performance came despite slowing usage of its Cash App and limited guidance for its newly acquired buy now, pay later (BNPL) firm, Afterpay.
• Mercado Libre: The Latin American eCommerce giant reported a 74% year-on-year increase in its Q4 revenue, which led to a 25.2% improvement in its stock value last week. Still, the company is facing a long path to recouping its previous losses as its stock is down by 35.13%, year to date.
• Booking Holdings: The OTA giant was the worst performer of the week as its stock slipped by 13%. The decline in its stock value came even though the company beat Q4 top- and bottom-line estimates, with its revenue increasing by 141% compared to the same quarter a year ago. The company expects continued volatility due to rising geopolitical tensions and uncertainty surrounding the impact of COVID-19 on the travel industry.
• BowX Acquisition Corp. (WeWork): The shared workspace company was another bottom performer on the CE100 Index, with its stock value declining by 7.2% last week. Nearly a year and a half after the company went public, its stock closed at an all-time low of $6.17 per share last Friday. The decline in stock value comes at a time when co-founder Adam Neumann, who was pushed out of his CEO role in 2019, will soon have the rights to return as an observer on the company’s board, which is currently lacking a chairman. 

How the Connected Economy’s 10 Pillars Performed

The connected economy is broadly composed of 10 pillars, each of which define how consumers and businesses interact with other another. These pillars are supported by enablers that offer the technology and infrastructure that powers these interactions.

PYMNTS’ analysis shows that Shop was the top-performing pillar last week, with its sub-index making a strong rebound from the week before, when it was the worst-performing pillar. The Shop pillar’s sub-index value increased by 6.6% last week, after a decline of 5.4% between Feb. 14 and Feb. 18.

The increase in index value was led by Mercado Libre and Coupang, which saw a 25.2% and 14.1% increase in their stock value last week. This potentially indicates that the proliferation of digital shopping in the Latin American market could continue to drive growth for eTailers in the future, especially as internet penetration is expected to reach 79% of the population by 2025.

It is worth noting, however, that the Shop sub-index has seen the steepest decline among all pillars of the connected economy since the start of the year. The index has slipped by 22.1% since Jan. 3.

Figure 2: Performance of the connected economy’s 10 pillars during the week of Feb. 22

 

 

 

If we take the performance of all the CE100 Index pillars over the last two months into consideration, Bank pillar comes out on top.

Its performance has been driven by Japanese bank MUFG, which powers cross-border banking and payments for businesses globally. MUFG’s stock has increased by 13.5% year-to-date. Ally Bank is another player that is contributing to the pillar’s growth, with its stock improving by 4.6% since the start of the year.

The growth in the Bank pillar has come as U.S. Treasury yield has hit its highest level since November 2019, with expectations that the Federal Reserve will tighten its monetary policies in 2022 at a much faster rate than previously anticipated.

Move, which was the only pillar that experienced growth during the week of Feb. 14, was the worst-performing pillar last week. Stocks of Booking Holdings (-13%) and Airbnb (-6.1%) drove down the pillar’s performance as Russia’s invasion of Ukraine is putting a damper on cross-border travel.

Case in point: Kayak.com’s flight search data indicates that searches for international travel declined by 8 percentage points overnight soon after Russia launched an attack on Ukraine — the steepest decline in months.

Booking Holdings, the parent company of Kayak, is still bullish on pent-up demand for summer travel, however. In an interview last week, the company’s CEO Glenn Fogel noted that consumers are unlikely to cancel their travel plans despite the volatility of the situation in Europe.

“Certainly, we’re in a very inflationary situation right now. And people know that having bought something right now, they’d be concerned about canceling it now and then possibly having to rebook it at a higher price down the road,” Fogel said. “So, I think you are going to be hesitant about getting rid of any travel reservations that they’ve already made, because they’ll want to make sure that they’ve gotten the best price.”

What’s Next

Stock markets around the globe are likely to see wild fluctuations in asset prices as President Biden announced plans to block key Russian banks from the SWIFT international payments system on Saturday.

“A lot of traders were kind of becoming convinced that the U.S. and Europe were not taking a hard stance,” said Edward Moya, senior market analyst at OANDA. “This action will be really difficult to digest and it will really pick a nerve for a lot of investors. … A lot of the rebound we saw in the latter half of last week will be tested.”

While the ban largely spares energy companies in Russia, which are key suppliers to Europe, it is still likely to result in high volatility in the European stock market. Trade between the U.S. and Russia, on the other hand, is relatively insignificant and is thus unlikely to cause a major impact.