In a welcome sight, nearly all 30 Dow Jones stocks are trading in the green today. One of the leaders in the Dow Jones is athletic company Nike (NKE), which is a bit surprising considering that it is dangerously exposed to China. It’s only up 2 percent, but it’s not too far away from today’s top gainer, Dow Inc, which is up nearly 4 percent. After the shellacking that the stock market took in recent days, these names have come a long way.
More than one-fifth of Nike’s business is reportedly tied to China, which places it in the crosshairs of the trade war that is being waged between President Donald Trump and President Xi Jinping. But the stock is not as susceptible to selling as some of its peers. Wall Street analysts reportedly point to Nike’s war chest comprised of diversification and “pricing power,” which separates it from an otherwise vulnerable pack of apparel and footwear stocks.
Nike is making a push toward direct-to-consumer sales, as evidenced by its recent acquisition of data analytics company Celect. Nike and rival Under Armour are pretty much neck-and-neck when it comes to direct-to-consumer, reflecting 30 percent and 27 percent of total sales, respectively.
With most of the Dow Jones 30 trading in the green today, it’s tempting to say that investors are no longer so skittish about the latest round of tariffs. GDP is averaging roughly 2 percent in 2019, and the economy is humming along. And corporate earnings are not nearly as brutal as Wall Street analysts were saying. China’s currency is showing signs of stabilization, and that is what could be fueling the rebound in the Dow Jones and the broader stock market. The S&P 500, for instance, has managed to be tracking flat for the week after falling off a cliff in recent days.
If you ask analyst firm, Nomura, however, the clouds have not yet dissipated over the stock market:
“We see the rebound in US stocks as a mere technical rally that looks like no more than a bump in the road on the way down. “
One thing is clear. China has basically overshadowed the Fed as the primary catalyst for the Dow Jones. Whatever happens with the trade war has a great deal of influence over whether greater turbulence or blue skies lie ahead for the U.S. economy. For now, Nike is holding its own.
Last modified: September 23, 2020 12:53 PM