Key Highlights

● American Express closed Friday at about $308.17, roughly flat, as BMO Capital Markets initiated coverage with an Outperform rating.

● BMO's price target of $380 sits well above Friday's close, and an Outperform rating signals expected outperformance.

● Visa rose to $385.45 and JPMorgan edged up to $332.99 as financials were among the S&P 500's stronger groups.

● Delta, a long-standing co-brand card partner, struck an upbeat tone on consumer demand despite missing earnings estimates.

American Express (NYSE:AXP) closed Friday at about $308.17, roughly flat on the day. The stock's quiet trading belied the attention it drew after BMO Capital (NYSE:BMO) Markets initiated coverage with an Outperform rating and a price target of $380, according to a market roundup of the day's analyst calls.

A price target is an analyst's estimate of where a stock could trade over a set period, typically 12 months, and an Outperform rating signals that the analyst expects the stock to do better than the market or its sector. BMO's target sits well above Friday's close.

Why the stock did not move more

Despite the upbeat call, American Express finished little changed. The broader market was firm: the Dow Jones Industrial Average rose 423.31 points to 51,654.95, the S&P 500 gained 46.18 points to 7,811.54 and the Nasdaq Composite added 172.83 points to 27,366.17. The financial sector was among the S&P 500's stronger groups.

Fellow Dow member Visa (NYSE:V) rose to $385.45, and JPMorgan (NYSE:JPM) edged up to $332.99 ahead of its earnings on Tuesday. American Express, which issues cards, runs its own payments network and earns fees from both cardholders and merchants, held steady while investors weighed the outlook for consumer spending.

The consumer question

That outlook is mixed. The University of Michigan's preliminary October sentiment index fell to 46.3 from 48.1, a five-month low, with a sharp drop in views of current conditions. "Frustration over cost-of-living continues to mount," said Joanne Hsu, director of the survey.

American Express's customer base tilts toward higher-income households and businesses, which tend to keep spending on travel and dining even when broader sentiment sours. Delta Air Lines (NYSE:DAL), a long-standing co-brand card partner of American Express, struck an upbeat tone on Friday despite missing earnings estimates. "The consumer response continues to be quite strong," said Delta chief executive Ed Bastian. Delta also said demand remains strong, supported by consumers' growing preference for experiences and travel.

Rates and the Fed

Interest rates matter for card issuers, influencing both what they earn on balances and what they pay for funding. The 10-year Treasury yield held near a 24-year high. The Fed raised rates in September for the first time since 2023, and Fed Governor Christopher Waller said Thursday he anticipates additional hikes to bring inflation back to the Fed's goal. Rate futures point to a strong chance of a December hike.

Labor data have been mixed: weekly jobless claims fell to 197,000, the lowest since July, but September payrolls rose by only 29,000.

Other financial calls

BMO's initiation was one of several analyst moves in financials on Friday. Morgan Stanley (NYSE:MS) upgraded Cboe Global Markets to Overweight with a $358 target, Piper Sandler (NYSE:PIPR) upgraded Jack Henry (NASDAQ:JKHY) to Overweight, and Keefe, Bruyette & Woods downgraded Genworth (NYSE:GNW) and Voya Financial (NYSE:VOYA) to Market Perform, according to a market report.

Bank Card-Spending and Credit Comments Will Be the Read-Through for American Express

Stocks trade on Monday, October 12, Columbus Day, while the bond market is closed. September consumer prices arrive Wednesday, October 14, with producer prices and retail sales on Thursday. The Fed meets October 27–28. Bank earnings begin Tuesday with JPMorgan, Goldman Sachs (NYSE:GS), Citi (NYSE:C) and Wells Fargo (NYSE:WFC), and their comments on card spending and credit quality will be a read-through for American Express.