Consumers embracing buy-now, pay-later services, which split purchases into installments, helped fuel record holiday shopping this year. The services, known as BNPL, saw sales of $940 million on Nov. 27’s Cyber Monday, up 43% from 2022, says
Adobe
Analytics.
Barron’s asked BNPL customers, who skew younger and are more fragile financially, how—and why—they use the service. When 22-year-old student Ayeza Khan heard about BNPL’s interest-free payments, it seemed too good to be true. But last year she used BNPL to buy a $300 winter jacket and realized it made it easier to balance bills, though, she admits, “[BNPL] creates an illusion that I’m not paying full price for these things.”
Aleah Wright, a 27-year-old freelance writer, tries to pay off her card every month to avoid interest charges. She uses her interest-free BNPL account (some charge interest) for purchases she can afford but can’t pay off right away, like Christmas gifts. “You just have more time to pay it off,” she says.
And Savannah Thrower, 27, skipped buying on Nov. 24’s Black Friday and paid in full for her sons’ presents. But she and her husband are eyeing a Dyson vacuum, which retails from $270 to over $700, and may use BNPL to pay for it. “Seeing it split up is just easier to be like, ‘Oh, it’s not that bad,’ ” she says.
Write to Sabrina Escobar at [email protected]
Last Week
Markets
Stocks rose and bond yields fell to begin the pre-Christmas week. Stocks dove in midweek on heavy options trading. The Federal Reserve’s core inflation metric for November came in at 2.6% year over year. On the week, the Dow industrials were off 0.05%, the S&P 500 rose 0.75%, and the Nasdaq Composite gained 1.21%.
Companies
The U.S. formed a task force to deter Iranian-backed Houthi attacks on shipping in the Red Sea after
BP
and
A.P. Moeller-Maersk
rerouted ships. Electric-truck maker
Nikola
founder Trevor Milton was sentenced to four years in prison for lying to investors about the company’s technology.
Apple
pulled its latest smartwatches from U.S. stores after a patent-suit loss.
Nike
sold off after a weak outlook. Angola is exiting OPEC.
Deals
U.S. Steel
agreed to a $14.9 billion offer, including debt, from
Nippon Steel.
President Joe Biden said the deal “deserves serious scrutiny.”…Axios reported that
Warner Bros. Discovery
and
Paramount Global
held early merger talks…Genetic sequencer
Illumina
will divest cancer-screener Grail after losing an antitrust case…
IBM
agreed to pay $2.3 billon for two units of Germany’s
SoftwareAG
…Adobe dropped its $20 billion acquisition of design-tools maker Figma after resistance from European regulators…The Financial Times said talks on a “strategic partnership” between Warburg Pincus and
BlackRock
had foundered….
Bristol Myers Squibb
said it was buying neuroscience company
Karuna Therapeutics
for $14 billion.
Write to Robert Teitelman at [email protected]
Next Week
Monday 12/25
Equity and fixed-income markets are closed in observance of Christmas.
Tuesday 12/26
S&P CoreLogic releases its Case-Shiller National Home Price Index for October. The consensus estimate is for a 5.1% year-over-year increase, following a 3.9% rise in September. The Federal Housing Finance Agency also publishes its House Price Index for October. Low supply of homes for sale in the U.S. continues to push up prices.
Wednesday 12/27
The Federal Reserve Bank of Richmond releases its Fifth District Survey of Manufacturing Activity for December. The consensus call is for a negative 4.0 reading, about one point better than the previous month’s data. All five of the regional Federal Reserve Bank manufacturing indexes—Dallas; Kansas City, Mo.; New York; Philadelphia; and Richmond, Va.—are showing contracting, but improving, activity in their manufacturing sectors.
Thursday 12/28
The Department of Labor reports jobless claims data for the week ending on Dec. 23. Initial claims are forecast to come in at 205,000. That’s lower than the historical average, suggesting a tight U.S. labor market.
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