What happened
Shares of American Express (AXP 5.50%) were up more than 11% on the week after market close Thursday, following a positive update on travel spending, crypto news, and the Federal Reserve making what could be the first of many rate hikes this year.
So what
American Express has not only recovered from the coronavirus but has also seen its stock hit new highs over the past year. However, the credit card and payments company has still been waiting for the resurgence of travel, which is one of its big customer segments. CEO Stephen Squeri provided an update on travel earlier this week.
Squeri told CNBC: "We're at 80% overall [travel and expenses] in the fourth quarter with consumer over 100% from 2019 levels. When we look at our travel bookings, our travel bookings were up in December." He added that travel bookings have continued to march higher in January and February.
Image source: Getty Images.
Squeri also potentially quelled some concerns about the future of business travel, which has been a source of concern considering remote work looks like it's here to stay:
You're going to have, I believe, a lot more internal travel, where colleagues and employees will come into the headquarters to be with their team for a few days. And they may do that multiple times a year. So I think that part of business travel will be a new piece.
In other news, American Express filed trademark papers that showed it might get involved with the metaverse. It's not the first big financial company to show interest.
Lastly, the Fed began raising the federal funds rate and indicated that it expects to continue to do so six more times this year and then potentially another five times in 2023, and many payment and fintech stocks seemed to respond positively this week.
Now what
Fed Chairman Jerome Powell at his recent press conference also said he did not expect a recession this year. Avoiding a recession would be huge for American Express because consumer sentiment and demand are what drive credit card loan growth and spending activity.
Overall, I think investors were happy to get some clarity on rate hikes, hear a bit of positivity from Powell, and see travel activity continue to rebound.
