US consumer stocks are facing their darkest moment! Nike plunges 20%, marking the largest single-day drop in history
Consumer stocks in the US performed poorly this week, raising concerns about the financial situation of American households. Nike plummeted 20% on Friday, marking its largest single-day drop in history, with a market value evaporating by approximately $28 billion. Wall Street analysts downgraded Nike's rating, and other companies also issued consumer resilience warning signals. Consumers are facing more and more unfavorable factors. Companies like Nike are working hard to address challenges, transforming product lines to reignite consumer interest. Further consumer anxiety may affect investor enthusiasm and shake the stock market
According to the VITON financial APP, the lackluster performance of consumer stocks in the US stock market this week has raised concerns about the financial situation of American households before the official start of the second quarter earnings season next month.
Due to lower-than-expected performance and a downward revision of full-year guidance, Nike (NKE.US) plummeted 20% on Friday, marking its largest single-day drop in history. The stock plunge wiped out approximately $28 billion from Nike's market value, expanding its year-to-date decline to 30%. At least seven Wall Street analysts downgraded Nike's rating after the earnings report.
The results of this athletic shoe company are "just the latest gloomy consumer data point in the past 36 hours," said Adam Crisafulli, founder of Vital Knowledge newsletter. Recent data from Walgreens Boots Alliance (WBA.US), Levi Strauss (LEVI.US), Hennes & Mauritz AB in Europe, and L'Oreal also sent warning signals about consumer resilience. Reports from Pool Corp (POOL.US) and General Mills (GIS.US) earlier this week also painted a picture of households under pressure.
Crisafulli stated, "Clearly, consumers are facing more and more headwinds."
Nike's stock performance lags behind the broader market
Despite facing persistent inflation and high borrowing costs, the main engine of the US economy - consumer spending - has remained relatively stable, but cracks are beginning to show. Wall Street will start analyzing US corporate earnings from mid-July to look for further evidence of consumer stress, which could dampen investor enthusiasm that has been driving the S&P 500 to record highs this year.
Jay Woods, Chief Global Strategist at Freedom Capital Markets, said, "Brands that haven't stood out are indeed struggling. Consumers are picky now, and as an investor, you have to pay attention to these trends."
It is certain that companies like Nike are working hard to address their unique challenges. As competition intensifies, the world's largest sportswear company is transforming its product line to reignite consumer interest.
In a disappointing annual guidance, Nike pointed out that amid softness in key licensed businesses, increased macroeconomic uncertainty, and ongoing "uneven consumer trends" in Europe, the Middle East, Africa, and other markets, the company is taking "aggressive action." Management stated that foreign exchange headwinds are also pressuring the outlook.
Stifel analyst Jim Duffy said, "Consumers are looking for novelty and inspiration, but they won't shop just for the sake of shopping." "Brands that achieve this goal are succeeding, but it's not a rising tide lifts all boats environment." Nike is just a very good example."