Just Blew It? By Spencer Jakab
Fed Chair Jerome Powell delivered not-so-great news gracefully. The Fed cut its growth outlook and raised its inflation view. He called uncertainty "remarkably high" and said the bank is " not in any hurry " to cut rates again. Stocks rose anyway, but traders are having second thoughts Thursday morning with futures pointing down after ECB President Christine Lagarde warned of the impact tariffs will have on European growth.
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Nike could become exciting again . So might its earnings reports.
The last time the sportswear company released results, the stock barely budged the following trading session. That's become unusual: Of its 10 previous quarterly reports, eight sparked violent moves-six lower, two higher.
Chief financial officers have to be good these days at managing expectations, not just balance sheets. The bar seems to have been lowered quite a bit for Nike's fiscal third quarter, with earnings-per-share estimates compiled by FactSet grinding steadily lower from $1.03 last May to 30 cents recently
It might not matter, though, if its guidance spooks or delights analysts. Companies making and selling apparel often spark sharp stock moves because tastes are so hard to predict and they sometimes get stuck with too many of last season's must-haves. Pandemic shipping chaos made life even harder, as did the rise of Chinese e-commerce giants Shein and Temu . Now tariffs have added another wrinkle.
Nike isn't alone. Rival Under Armour's last four reports sparked stock moves of 14%, on average-two lower, two higher. For Crocs, the last two were a jump of 24% and a plunge of 19%, with five out of its past eight stock-price reactions in the double digits. Three of the last five for Skechers, five of the last eight for Hoka-owner Deckers Outdoor and five of the past nine for Lululemon were double-digit surges or plunges.
Clothing retailers can be volatile too, and their surprises often are streaky. Long-troubled Gap's shares have seen eight post-earnings gains in a row under its new CEO -five in the double digits. American Eagle Outfitters, by contrast, has dropped after each of its last eight reports, three of which were double-digit dives. Fast-fashion retailer H&M's Swedish parent company and Zara's Spanish one both are volatile too, though European investors seem a bit less excitable.
Repeated fashion emergencies can push financially weak sellers into bankruptcy, as they did recently for Forever 21- its second filing -and last spring at Express . There was a spike in retail restructurings in 2024. Sagging consumer confidence could keep liquidators busy .
Amid on-again, off-again tariff announcements, another danger is retailers tying up precious working capital in inventory to get ahead of them. Meanwhile, hopes for a closing of the "de minimis" loophole that allows foreign e-commerce companies to send small packages to the U.S. duty-free have been dashed for now . Restrictions might be circumvented anyway by shifting production out of China .
There's still no business like shoe business: Nike stock is down by more than half since 2021, yet investors somehow have made 20 times their money in a quarter century. Reaping those long-term gains required nerves of steel.
Stocks I'm Watching
QXO : The building-products distributor agreed to buy Beacon Roofing Supply (BECN), in a deal worth about $11 billion including debt that is expected to be announced early Thursday. QXO shares jumped more than 8% in premarket trading.
Nvidia : Chief Executive Jensen Huang told the Financial Times the company would spend hundreds of billions of dollars on chips and other electronics made in the U.S. His remarks came as Nvidia hosts its flagship AI conference.
Nissan Motor : The Japanese car maker said it would cut 20% of senior management positions, starting April when the new chief executive takes over. Shares fell 2.4% Thursday.
CVC Capital Partners : The buyout firm's first full-year earnings since going public beat expectations. Shares rose roughly 3% in Amsterdam in morning trading.
Geely Automobile : The company's net profit more than tripled in 2024, helping cement its position as a leading Chinese EV player. Shares gained 1.5% in Hong Kong.
SoftBank : The Japanese tech conglomerate agreed to buy U.S. chip designer Ampere Computing for $6.5 billion, its latest AI-related investment. SoftBank shares fell 2%.
Accenture : The professional-services firm and the Chinese e-commerce company are both due to report early Thursday. Later, results are slated from FedEx $(FDX)$, memory-chip maker Micron Technology $(MU)$ and Nike $(NKE)$.
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Nvidia Played to a Tough Crowd
Nvidia is doing just fine, says Heard tech columnist Dan Gallagher . Lately, it has seemed harder to convince the world of that. Chief Executive Jensen Huang addressed the market's worries head-on at its big conference this week, yet the stock is sagging.
What I'm Reading The Federal Reserve's first set of projections since Donald Trump's inauguration emphasized-in the central bank's understated way-just how much tariffs have turned the economic outlook on its head. ( WSJ ) Hold the obituary: Germany's defense buildup is one of several signs Europe might be shaking off economic stagnation. ( WSJ ) State lawmakers in Florida have filed a raft of bills aimed at reducing property taxes-or gutting them altogether-as property prices soar. ( WSJ ) As the debt ceiling looms, the Fed has slowed the runoff of bonds held on its balance sheet. ( WSJ ) We aren't very good at picking basketball games. That should make us more humble about financial predictions given all the variables in the economy. ( The Better Letter ) Beyond the Newsroom
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About Me
My name is Spencer Jakab and I've been musing about money and markets for more than 30 years, including editing The Wall Street Journal's Heard on the Street column for a decade, writing two investing books and running a team of stock analysts at a global investment bank.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
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March 20, 2025 06:51 ET (10:51 GMT)
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