Credit Card Jitters – Usage Drops in January. Stocks to Watch – AXP, V, MA, DFS

Wall Street

Consumer credit jumped in January, but there was a caveat – credit card usage declined. This could pressure earnings for card issuers who depend on free-spending consumers. Continued worries surrounding the economy could be causing consumers to pull-back from purchases after the holidays.

Credit has been expanding for five straight months as consumers come back into the light and make big ticket purchases. It could also be the recession lasted so long that big purchases like automobiles etc are in need of replacement. That could be leading to the disconnect between the strength in credit and the decline in credit card usage.

Credit Card Stocks to Watch

American Express Company (NYSE:AXP) is up half a percent today on news that it was launching co-branded cards for brokerage clients such as Morgan Stanley. Volume wise, the stock looks to be in line with its average, but nothing that indicates a catalyst in either direction. The market continues to muddle along with anemic volume. AXP has a market cap of $61.3 billion. One to watch if consumer credit usage continues to flat-line or decline.

Visa Inc. (NYSE:V) is up over a percent today on average volume. There is little in the way of company news and the stock is reacting to the overall positive tenor of the recent economic data. It is hoped that with a continued recovery, consumers will once again use plastic for their purchases. Gas prices could lead that rise as consumers look to offset rising fuel costs by resorting to credit. Wholly unsustainable, it may give that temporary boost to usage numbers overall. Visa’s market cap is $95.17 billion.

Mastercard Inc. (NYSE:MA) is following the rest of the credit card issuers into positive territory. The overall bullish mentality on the market is pushing MA up .86% on average volume. News out of the company has them naming Steve Grigg as President. Mastercard’s market cap is currently at $52.54 billion.

Discover Financial Services (NYSE:DFS) is bucking the overall positive trend on the market today. Down .3% on nearly 700k shares traded, DFS seems to be unable to follow its counterparts higher. Market cap on the stock stands at $16.06 billion.

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About MarcS

An experienced trader with a background in political science, Marc got his start as an individual trader surfing the old stock message boards. He is always on the lookout for the next big winner.

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