With the odds of a U.S. federal government shutdown climbing, credit card stocks are leading banks lower in Tuesday midday trading, with Bread Financial (NYSE:BFH) stock hitting its lowest level since late June.
A shutdown could hundreds of thousands of workers without paychecks for the duration of the closure. Furthermore, employees for government contractors also stand to lose pay during the standoff. And while almost all government employees will get backpay once the federal government resumes operations, employees of contractors likely won’t be made whole. On top of that, the White House has been threatening drastic permanent layoffs in the event of a shutdown.
That loss of pay, whether temporary or permanent, could boost credit card and other consumer loan delinquencies.
Capital One Financial (NYSE:COF) stock sank 5.7% in Tuesday midday trading, and dipped to as low as $208.72, its lowest level since Aug. 11. Bread Financial (NYSE:BFH) stock, down 3.2%, slid to as low as $55.36, its lowest price since June 24.
Sychrony Financial (NYSE:SYF) stock, off 4.5% at midday, fell as low as $69.31, its lowest point since Aug. 11. The decline wasn’t as stark for American Express (NYSE:AXP), -2.8%, which is known for the higher credit quality of its cardholders. AXP stock fell to as low as $331.84 on Tuesday, its lowest point in almost two weeks.
Other consumer finance stocks include Ally Financial (ALLY) -2.6%, Credit Acceptance (CACC) +1.8%, SoFi Technologies (SOFI) -6.3%, SLM Corp. (SLM) -2.7%, Rocket Companies (RKT) -4.2%, LendingClub (LC) -7.0%, and LendingTree (TREE) -4.4%.
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