Stocks slip despite blowout Nike report helping to buoy the Dow
U.S. equity futures were firmer in early trading following reports that an agreement has been reached on a continuing resolution to avoid a government shutdown at the end of the month. Meanwhile, J&J is beginning a large phase 3 trial of its COVID-19 vaccine which will notably feature only one dose, as opposed to the two dose regimens that some other leading vaccine contenders are contemplating. The averages have moved lower after their early strength, though the Dow is not behaving as badly as the S&P and Nasdaq given the support from Nike (NKE) following the sneaker giant's earnings report.
ECONOMIC EVENTS: In the U.S., the FHFA house price index climbed another 1.0% to 293.0 in July, hitting a new all-time high. Markit's manufacturing PMI edged up 0.4 ticks to 53.5 in the flash September print.
Data from the Johns Hopkins Whiting School of Engineering shows there are now 31.7M confirmed cases of COVID-19 worldwide, including 6.9M in the U.S., and 972,372 deaths due to the disease, including 201,000 in the U.S.
TOP NEWS: Shares of Nike are 10% higher near noon after what Piper Sandler analyst Erinn Murphy called a "slam dunk of a quarter." Guggenheim analyst Robert Drbul, who was among the many on Wall Street to raise his price target on Nike, noted that the company reported earnings of 95c per share that nearly doubled his higher-than-consensus forecast of 51c per share. Meanwhile, Morgan Stanley analyst Kimberly Greenberger said the company's "stunning snapback" in its fiscal first quarter confirm that Nike is one of the few apparel and footwear companies she covers whose business model, total addressable market, and margin profile look better positioned post-pandemic.
Tesla (TSLA) shares are down 8.5% at midday following last night's Battery Day event held by the company. Deutsche Bank analyst Emmanuel Rosner, who upgraded Tesla to Buy from Hold with a price target of $500, said the Battery Day showcased an "impressive trajectory" for Tesla's technology, capacity and cost, which should help extend the company's lead "considerably." Meanwhile, Morgan Stanley's Adam Jonas said Tesla's event "largely lived up to the hype, but didn't clearly exceed it," with his view being that the main takeaways were that Tesla's battery technology is outpacing current growth in supply and that it is "time to spend significantly."
In COVID-19 news, Johnson & Johnson (JNJ) announced the launch of its large-scale, pivotal, multi-country Phase 3 ENSEMBLE trial for its COVID-19 vaccine candidate, JNJ-78436735. Interim results from the company's Phase 1/2a clinical study demonstrated that the safety profile and immunogenicity after a single vaccination were supportive of further development, the company said. J&J has continued the scaling up of its manufacturing capacity and remains on track to meet its goal of providing 1B doses of a vaccine each year, the company added.
Western Digital (WDC) announced that it is reorganizing and creating separate business units for its Flash and Hard Drive product businesses, after which Benchmark analyst Mark Miller and Craig-Hallum analyst Christian Schwab both said they believe this is likely a first step to ultimately spinning off one of the businesses at some point in the future.
MAJOR MOVERS: Among the noteworthy gainers was Twitter (TWTR), which rose nearly 9% after Pivotal Research analyst Michael Levine upgraded the stock to Buy from Hold.
Also higher was JinkoSolar (JKS), which gained 19% after reporting quarterly results.
Among the notable losers was AC Immune (ACIU), which fell 43% after Genentech (RHHBY) said that semorinemab did not meet its primary efficacy endpoint in a Phase 2 trial.
Also lower was Regenxbio (RGNX), which is down 2% after partner Novartis' (NVS) bid to expand its Zolgensma to more spinal muscular atrophy patients faces a possible delay after the FDA requested another study in older children getting the drug via a spinal infusion.
INDEXES: Near midday, the Dow was down 101.80, or 0.37%, to 27,186.38, the Nasdaq was down 148.20, or 1.35%, to 10,815.43, and the S&P 500 was down 26.41, or 0.80%, to 3,289.16.