Why did Block stock go down today? Rising yields hit fintechs
Block (NYSE:SQ) stock retreated 8% in Monday afternoon trading as stronger than expected economic data drove Treasury yields higher, prompting market participants to debate the Federal Reserve's path for interest rates.
In other words, it appears good news translates to bad news, as the U.S. central bank struggles to reduce demand as well as price pressures to get inflation, which is still running near 40-year highs, back down to its objective. The broader stock market, meanwhile, saw intense selling pressure as relatively positive economic data could motivate the Fed to raise interest rates further.
Most if not all fintech stocks gapped down as of 3:47 p.m. ET, including PayPal (PYPL), -2%, Fiserv (FISV) -3.4%, Blend Labs (BLND) -7.7%, SoFi Technologies (SOFI), -4.5%, Lightspeed Commerce (LSPD), -7.3%, and Nu Holdings, -8.4%.
Higher interest rates spell trouble for fintechs because borrowing and funding costs would rise even more than they have already. That, in turn, would hurt the group's profitability margins. Seeking Alpha contributor Geoff Considine viewed Block (SQ) shares as a Sell, arguing that Wall Street estimates "continue to be too optimistic."
Previously, (Nov. 29) Square and Afterpay saw 61M transactions during the Black Friday and Cyber Monday weekend.