While you were sleeping: Nike stock drops

Thursday 23rd March 2017

Wall Street was mixed as a decline in Nike shares offset a gain in stocks of Microsoft and Apple.

Investors were also cautious ahead of Thursday’s vote in the House of Representatives on a Republican health-care bill.

“Even the mistiest-eyed optimist appears to be coming to the realisation that even on health care, where there is some form of consensus, reforms are likely to take a lot longer than realised,” CMC Markets analyst Michael Hewson wrote in a note, Bloomberg reported. “Any other programs like tax and banking reform and infrastructure spending are likely to get pushed further out into the future.”

In 1.20pm trading in New York, the Dow Jones Industrial Average fell 0.2 percent. However, the Nasdaq Composite Index rose 0.2 percent. In 1.05pm trading, the Standard & Poor’s 500 Index slipped 0.1 percent.

Tuesday’s drop on Wall Street increased the appeal of some shares.

“What we're seeing today is buyers being opportunistic and trying to gain entry into the overall market," Robert Pavlik, chief market strategist at Boston Private Wealth in New York, told Reuters. “That's why we're seeing tech and industrials stocks, which last a lot on Tuesday, lead today."

The Dow moved lower as slides in shares of Nike and those of Goldman Sachs, down 6.5 percent and 1.6 percent respectively, outweighed gains in shares of Microsoft and those of Apple, up 1 percent and 0.7 percent respectively.

“Everyone has been waiting for a dip for so long that when you get some kind of a dip, for not just tech but large-cap value too, it’s one of those opportunities to buy in,” Mariann Montagne, a portfolio manager at Gradient Investments, told Bloomberg.

“Maybe people are seeing a cue that things aren’t deteriorating across tech land,” Montagne noted. “The deterioration of tech wasn’t due to fundamentals, it was just a function of pricing.”

However, Nike’s stock dropped after the company’s lower-than-expected quarterly sales bolstered concern it’s losing ground to key rivals.

"A lot of the concern about Nike is its growth in a competitive environment,” Edward Jones analyst Brian Yarbrough told Reuters. “Three to five years ago, a competitive environment (for Nike) was almost non-existent and the market was moving towards athleisure.”

US Federal Reserve Chair Janet Yellen, slated to speak on Thursday, might offer fresh clues on the pace of interest rate increases.

A National Association of Realtors report showed its pending home sales index retreated 3.7 percent to a seasonally adjusted annual rate of 5.48 million in February, from 5.69 million in January.

Closings retreated in February because a lack of properties for sale and weakening affordability conditions stifled buyers in most of the country, according to Lawrence Yun, NAR chief economist.

"Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that's pushing up price growth and pressuring the budgets of prospective buyers," Yun said in a statement. "Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market."

In Europe, the Stoxx 600 Index finished the day with a 0.4 percent drop from the previous close. France’s CAC 40 Index gave up 0.2 percent, Germany’s DAX Index declined 0.5 percent, while the UK’s FTSE 100 Index fell 0.7 percent.

A terror attack in London, near Parliament, left at least one person dead.

BusinessDesk.co.nz

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