The Fintech giant grabbed headlines with its Afterpay Limited service

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The Dow Jones Industrial Average (^DJI) was down around 650 points in early afternoon trade, while the S&P 500 (^GSPC) was down 2.3% and the NASDAQ Composite (^IXIC) was down 2.8%.

On Friday, a number of things influenced SQ. Several news outlets, including Reuters, reported early Friday morning that SQ and its purchase now, pay later service, APT, had discontinued their connection with Australian Bank Westpac Banking Corp. Westpac banking users have access to the APT app as part of its banking-as-a-service platform. However, SQ chose to withdraw APT from the bank and will now try to expand its Cash App business in Australia.

But SQ’s stock price started plummeting in the late morning and afternoon, together with the entire market, after Federal Reserve Board Chair Jerome Powell’s address at the Fed’s Jackson Hole Economic Symposium.

The market had been awaiting Powell’s speech all week, expecting a hawkish stance on inflation, which he delivered on Friday. Powell stated that the Fed will “use our instruments decisively” to reduce inflation, implying that interest rate policy will not be eased anytime soon. Powell recognized that it may cause some discomfort:
Higher interest rates, stagnant growth and softer labor market conditions will reduce inflation but they will also cause some pain for consumers and companies. These are the unintended consequences of lowering inflation. However, failing to restore price stability would cause considerably more misery.

A ray of hope emerged Friday when the U.S. Bureau of Economic Analysis (BEA) personal consumption expenditures (PCE) data indicated a 0.1% decrease from June. Furthermore, the year-over-year increase was 6.3%, down from 6.8% in June.

The greater shock though, was Powell’s inflation speech, which sent most companies, including SQ, falling on worries of an economic downturn.

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