U.S. Stocks Struggle to Extend an 8-Week Rally, Nike Drops 12%

Barry Adams
22 Dec, 2023
New York City

Stocks struggled in early trading, and benchmark indexes attempted to extend the market rally to eight consecutive weeks.

The yield on 10-year Treasury notes declined marginally, and investors generally stayed on the sidelines ahead of the holidays.

Crude oil prices advanced for the third week in a row on the growing worry of Houthi militant attacks on ships traveling in the Red Sea.

Moreover, Angola announced its plan to leave the OPEC+ after 16 years over a disagreement on the 2024 production quota and record U.S. daily crude oil production.

 

U.S. Indexes and Yields

The S&P 500 index gained 0.8% to 4,718.03, and the Nasdaq Composite increased 0.6% to 14,863.01.

The yield on 2-year Treasury notes decreased to 4.33%, 10-year Treasury notes inched lower to 3.85%, and 30-year Treasury bonds eased to 4.0%.

Crude oil prices dropped below $74 a barrel after U.S. daily production surged to a record high of 13.3 million barrels a day last week, the Energy Information Administration reported Thursday.

WTI crude oil increased $0.51 to $74.40 a barrel, and natural gas prices increased 4 cents to $2.61 a thermal unit.

Gold advanced $16.31 to $2,061.56 an ounce and extended this year's gains to 13.5%.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 101.57 and extended the previous week's loss of 1.4% and the loss of 0.9% in the year so far.

 

U.S. Stock Movers

Nike Inc. dropped 12.7% to $106.90 after the athletic shoe and sportswear maker lowered its annual sales growth outlook.

Revenue in the fiscal second quarter ending in November increased 1% to $13.4 billion from $13.3 billion, net income advanced $1.6 billion from $1.3 billion, and diluted earnings per share rose to $1.03 from 85 cents a year ago.

Inventories declined 14% from a year ago to $8.0 billion, reflecting a decrease in units and a sharp reversal from elevated inventories a year ago after the company discounted heavily old-style products to make way for new merchandise.

The company repurchased 11.9 million shares for $1.2 billion as a part of its $18 billion stock repurchase program for four years, starting in June 2022.

As of the end of November, the company had repurchased 65.9 million shares for $7.1 billion.

The company also announced its plan to cut $2 billion in costs over the next three years.

Foot Locker, the retailer that relies heavily on Nike products, dropped 8.9% to $29.49 after the announcement of the Nike results.

Karuna Therapeutics soared 47.4% to $317.22 after Bristol Myers agreed to pay $330 per share, or $14 billion, to acquire the maker of the schizophrenia drug KarXT.

The U.S. Food and Drug Administration has accepted KarXT for a review.

Bristol-Myers declined 1.7% to $50.36.