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Formed by a combination of JCPenney’s credit card processing unit and The Limited’s credit card bank business, Bread Financial is a provider of private label and co-branded credit cards, loyalty programs, and marketing services. The company’s most financially significant unit is its credit card business that partners with retailers to jointly market Bread’s credit cards to their customers. The company also retains minority interest in its recently spun-off LoyaltyOne division, which operates the largest airline miles loyalty program in Canada and offers marketing services to grocery chains in Europe and Asia.

Formerly the captive financial arm of General Motors, Ally Financial became an independent publicly traded firm in 2014 and is one of the largest consumer auto lenders in the country. While the firm has expanded its product offerings over time, it remains primarily focused on auto lending with more than 70% of its loan book in consumer auto loans and dealer financing. Ally also offers auto insurance, commercial loans, credit cards, and holds a portfolio of mortgage debt, giving the bank a diversified business model, which includes brokerage services.

Intercontinental Exchange is a network of regulated exchanges and clearing houses for financial and commodity markets, fixed-income pricing and analytics and a growing mortgage technology unit. The company has a multi-asset-class derivatives and cash market franchise, spanning interest rates, equity and equity derivatives, credit, foreign exchange, metals, and agricultural commodities. ICE operates the New York Stock Exchange.

Allocating capital is one of the core competencies of the U.S. economy. That doesn't mean the industry isn't cyclical, and the recent period of high rates has been a challenge. Consider the IPO market. The U.S. initial public offering market, which sizzled in 2021 with 1,144 IPOs and a total transaction value of $253 billion, saw a sharp downturn in 2022, with 368 deals raising $20 billion; 2023 wasn't much better. The IPO market has started to show signs of life, especially in the U.S., where the dollar value of deals in 1Q24 was up 178% from the prior year. We expect IPO activity to improve into 2025, aided by improving equity market valuations, the likelihood of lower interest rates, pent-up demand for IPOs, and the potential for companies in the currently hot artificial intelligence area to seek growth capital. Meanwhile, the asset management and brokerage segment, which suffered from lower stock valuations in 2022, experienced improved valuations throughout 2023 and into this year. That has had a positive impact on earnings results. The financial exchange and data segment has a strong backdrop, with higher trading volumes due to global macro developments leading to volatility across equity, fixed-income, currency, and commodity markets. But sharply higher interest rates pushed up the cost of financing and put a damper on the high-profile debt underwriting and merger/acquisition activity. On the positive side, as the Fed's rate-cut campaign kicks off, we expect to see better M&A & IPO environments emerge into 2025. For more insights, see our latest Industry Review & Outlook deep-dive report on Capital Markets.