The Zip Co Ltd (ASX: ZIP) share price enjoyed a rare day in the green today.
After hitting a two-month low of 66 cents yesterday, the buy-now, pay-later (BNPL) provider's shares made a comeback today.
This is despite the company not releasing any announcements to the market today.
At the close of trading, Zip shares were up 4.48% to 70 cents apiece — closing higher for just the second time in the past two weeks.
Let's take a look at what could be driving these gains.
What's powering Zip's stock?
Investors bid up the Zip share price following an uplift across the S&P/ASX 200 Financials Index (ASX: XFJ).
In a sea of green, the financials sector ended the day up 0.99%.
This comes after Wall Street posted strong gains overnight, with the Dow Jones lifting 1.88%.
News emerged that the US Federal Reserve could back off its aggressive rate hikes to avoid a potential recession.
This represents a change of events from when the central bank indicated it would raise interest rates despite the recession risk.
Nonetheless, the financial industry is rebounding from the heavy beating it took this week, having declined 4%.
Shares in fellow BNPL company Block Inc CDI (ASX: SQ2) also closed higher today, up 4.96%, while Sezzle Inc (ASX: SZL) retreated after early gains to finish flat at 49.5 cents.
However, you might want to keep an eye out next week when the Reserve Bank of Australia (RBA) meets again.
Last month, the RBA lifted the official cash rate to 2.35%.
While this is the highest level it has been since early 2015, the RBA is using its toolkit to fight against the above-target inflation.
Zip share price summary
Over the past 12 months, the Zip share price has plummeted 90%. Year to date, it is down 84%.
A challenging external environment mixed with the company's widening credit losses and ballooning net losses appear to have scared investors off.
Zip presides a market capitalisation of around $467.98 million.
