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05 December 2023

US STOCKS-Wall Street eyes higher open on strong Nike earnings

By Reuters

Wall Street's main stock indexes were set to open higher on Wednesday as Nike brought cheer to markets with its better-than-expected results, while investors awaited more economic data for hints on the path of future interest rate hikes.

Nike Inc jumped 11.7% in premarket trading after reporting its best quarterly revenue growth in more than a decade, barring one quarter, and beat profit expectations on strong holiday demand from North American shoppers.

Peers Lululemon Athletica Inc, Under Armour Inc and Vans sneaker maker VF Corp rose between 2.4% and 4.6%.

FedEx Corp, which sparked a market selloff in September by pulling financial forecasts, rose 5.1%, on the delivery company's plans to slash an additional $1 billion in costs.

"Most people think we are heading toward a recession, but when earnings like Nike and FedEx are strong, then all of a sudden that could pave the way for higher (stock) prices next year," said Adam Sarhan, chief executive at 50 Park Investments, New York.
"The underlying conditions remain very weak and it appears that this could be just a little seasonal bounce until the end of the year."

Wall Street's main indexes closed slightly higher on Tuesday, following early losses as Treasury yields jumped after the Bank of Japan's surprise monetary policy tweak.

Fears of a recession following the U.S. central bank's prolonged interest rate hikes have weighed heavily on equities since its policy meeting last week, despite signs of cooling inflation.

However, the benchmark S&P 500 and Dow Jones Industrial Average were on track for their first quarterly gains this year, rising 6.6% and 14.4%, respectively, on the back of upbeat earnings, easing price pressures and hopes that the Federal Reserve will slow its rate hikes.

December's consumer confidence survey due at 10 a.m. ET is expected to show a marginal improvement in business conditions at 101.0 from 100.2 a month ago, while existing home sales are expected to fall 5.4% in November, lower than the 5.9% fall a month ago.

Other data expected through the week on core inflation and the labor market will likely determine the future course of interest rate hikes by the Fed.

At 8:09 a.m. ET, Dow e-minis were up 305 points, or 0.92%, S&P 500 e-minis were up 27.5 points, or 0.71%, and Nasdaq 100 e-minis were up 57.75 points, or 0.52%.

Tesla Inc pared some early gains, and was last up 1.9%, following a report that the electric-vehicle maker plans to cut jobs and freeze hiring.

The company's shares had got a boost earlier on Elon Musk's plans to step down as Twitter CEO once he finds a replacement.

Market volumes are expected to decline this week before the Christmas and New Year holidays amid low participation.