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- 📈 Nike Laces Up for a Comeback
📈 Nike Laces Up for a Comeback
FedEx to split into 2 public companies, BigLots closing all stores, Micron stock drops, TPG seeks to buy Crown Castle fiber for $8B, Nike beats low expectations
Evelio Silvera
December 20, 2024
Good morning.
⚡ The Fast Five → FedEx to split into 2 public companies, BigLots closing all stores, Micron stock drops, TPG seeks to buy Crown Castle fiber for $8B, Nike beats low expectations
🔎 Market Trends → Stocks end flat after Fed-induced selloff as early bounce fades; US Futures Flat Ahead of PCE Inflation Data
And now…
⏱️ Your 5-minute briefing for Friday, December 20, 2024:
MARKET BRIEF
Before the Open
As of market close 12/19/2024.
Pre-Market
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Fear & Greed
Markets in Review
Dow Ends Losing Streak as Resilient GDP Supports Optimism
The Dow broke its 10-day losing streak, finishing flat at 42,342.2. The S&P 500 and Nasdaq edged lower by 0.1% to 5,867.1 and 19,372.8, respectively. Utilities led the gainers, while real estate lagged.
The Big Picture:
Investors navigated mixed signals Thursday as strong GDP growth bolstered optimism about the economy’s resilience, even as corporate earnings highlighted sectoral challenges. Q3 GDP rose 3.1%, beating estimates and underscoring solid consumer spending and business investment.
Meanwhile, the Fed's 25-basis-point rate cut earlier in the week left the monetary stance "significantly less restrictive," but Chair Jerome Powell emphasized caution on further cuts, signaling confidence in the economy’s trajectory.
Oil slipped 1% to $69.85/barrel amid demand concerns. Gold dropped 1.6% to $2,610.80/oz, and silver tumbled 4.1% to $29.49/oz, reflecting cooling safe-haven demand.
Market Movers:
Lamb Weston (LW): Fell -20.1%, the S&P 500’s biggest loser, after posting weak Q2 results, lowering guidance, and announcing its CEO’s departure.
Micron Technology (MU): Dropped -16.2%, hit by a soft outlook for consumer markets, highlighting lingering demand weakness in memory and storage.
Darden Restaurants (DRI): Jumped +14.7%, topping the S&P 500, on strong Q2 results and a raised full-year revenue outlook, driven by solid performance at Olive Garden and LongHorn Steakhouse.
Accenture (ACN): Rose +7.1%, the S&P 500’s second-best performer, after beating Q1 earnings and lifting its revenue growth forecast.
What They’re Saying:
"Strong GDP growth and robust consumer spending validate the Fed’s patience on future cuts, suggesting the economy can weather tighter conditions heading into 2025," Stifel noted in a client report.
WHAT WE’RE WATCHING
Events
Today: Bureau of Economic Analysis - Personal Consumption Expenditures (PCE) - 8:30am
Why You Should Care: It's the Federal Reserve's primary inflation measure. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.
Earnings Reports
Today: Carnival Corp., Winnebago, Soho House
Monday: BHP Group
MARKET BRIEF
Leading News
Nike Steps Up: A Turnaround in the Making?
Why it matters:
Nike (NKE) is signaling a fresh focus on core strengths under new CEO Elliott Hill, with better-than-expected Q2 earnings. Investors now ask: Is this the first step in a long-term comeback?
Zoom Out:
Nike reported $12.35 billion in revenue, beating the $12.13 billion estimate but still trailing last year’s $13.39 billion. Adjusted EPS hit $0.78, well above projections of $0.63 but below last year’s $1.03.
Hill’s return is more than symbolic. Just 60 days in, he’s promising a renewed “obsession with sport” and intends to refocus on storytelling and athlete-first strategies. His team aims to rebuild an integrated marketplace across Nike Direct and wholesale partners, acknowledging past missteps that cost Nike its edge.
The competition is fierce: Rising stars like On Holding (ONON), Skechers (SKX), and Hoka (DECK) have eroded Nike's market dominance. But Hill’s vision to clean up inventory and restore margin health suggests he’s playing the long game.
Key Insights:
Revenue Breakdown: Nike Brand revenue reached $11.95B, but it’s down 7% YoY across all geographies.
Direct-to-consumer (DTC) fell 13%, driven by a 21% drop in digital sales.
Wholesale revenues slid 3%, signaling challenges in channel relationships.
Margin Moves: Gross margin dipped to 43.6% (down 100 basis points), with a strategic pivot to full-price models expected to stabilize profitability.
Inventory Cleanup: CFO Matthew Friend highlighted plans to reduce excess stock, paving the way for higher-margin seasonal products in fall 2025.
Market Pulse:
"Hope can be powerful," says Simeon Siegel of BMO Capital Markets, emphasizing that Nike’s story hinges on investor belief in its rebound rather than near-term numbers.
Bull’s Take:
Nike’s renewed focus on storytelling and partnerships is a bullish signal. A streamlined inventory and margin improvements hint at better days ahead. For investors, NKE at current levels offers a bet on a brand with a proven history of bouncing back—and plenty of runway left. Keep an eye on Nike’s digital turnaround and wholesale partnerships. Long-term players may find today’s challenges are tomorrow’s opportunities.
Headlines
US FDA says Lilly’s weight-loss drug shortage is resolved (link)
FedEx Announces Intent to Separate FedEx Freight, Creating Two Industry-Leading Public Companies (link)
Big Lots laying off over 500 corporate employees including CEO, closing all stores (link)
Amazon agrees to worker safety measures to settle US probe (link)
Micron stock drops 17% on warning of weaker demand for consumer chips (link)
TPG in advanced talks to buy Crown Castle's fiber unit for $8 bln, source says (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to High Yield Harry