What Happened?
Shares of consumer financial services company Synchrony Financial (NYSE: SYF) fell 7.1% in the afternoon session after investors grew concerned about the impact of artificial intelligence on employment, following a major workforce reduction at payments firm Block.
The sell-off in Synchrony and other credit card companies, such as American Express and Capital One Financial, was triggered by Block's decision to cut a significant portion of its staff as part of an artificial intelligence overhaul. This action sparked fears among investors that widespread AI adoption could lead to significant job losses. Such a development could send shockwaves through financial systems, negatively impacting credit-sensitive companies that rely on consumer financial health.
Adding to the concerns, hotter-than-expected inflation data and rising concerns over credit risk rattled investors.
January's Producer Price Index (PPI), a measure of wholesale inflation, rose 0.5% against expectations of 0.3%, with the core component jumping 0.8%. This report fuels the narrative of "sticky inflation," suggesting the Federal Reserve may have limited room to cut interest rates. Compounding these worries are growing anxieties in the credit markets. According to a Bank of America strategist, problem loans are an increasing concern that could pressure lenders. Investors are reassessing credit risk, particularly in private-credit and leveraged-loan markets, weighing on the valuations of banks sensitive to the economic cycle.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Synchrony Financial? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Synchrony Financial’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock dropped 8.1% on the news that President Donald Trump proposed capping credit card interest rates. In a social media post, Trump suggested a one-year cap of 10%, stating that Americans were being "ripped off" by rates of 20% to 30%. This proposal rattled investors because it threatened a key source of revenue for the credit card industry. The potential for lower interest income led to a slump across financial stocks. Shares of other consumer finance firms, including Capital One and Bread Financial, also fell sharply. The decline showed investor concern about the possible impact of such a cap on the profitability of lenders like Synchrony.
Synchrony Financial is down 18.5% since the beginning of the year, and at $69.03 per share, it is trading 22% below its 52-week high of $88.47 from January 2026. Investors who bought $1,000 worth of Synchrony Financial’s shares 5 years ago would now be looking at an investment worth $1,726.
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