The Dow Finished Perfectly Unchanged Thursday, but Why Did Nike and AT&T Fall?

Amid a flurry of earnings releases Thursday, the Dow Jones Industrials (DJINDICES: ^DJI  ) collectively yawned, ending the day exactly unchanged. Most of the attention of stock market investors went to individual companies rather than market indexes today, as a busy day of earnings releases sent companies wildly in either direction. Yet, amid the cacophony of earnings-related noise, declines in Nike (NYSE: NKE  ) and AT&T (NYSE: T  ) showed the collateral damage that other companies can wreak on peers in their industries.

Source: Wikimedia Commons.

Nike's shares fell 1%, with many analysts attributing at least part of the decline to Apple's (NASDAQ: AAPL  ) earnings release. Within the last week, news that Nike would make layoffs in the department that is responsible for the FuelBand raised a huge amount of speculation over Nike's future plans for its premier wearable fitness-tracking device. Many reports initially suggested that Nike would stop making wearable technology entirely, opening the door for Apple to step in with its long-heralded iWatch concept. Yet, for its part, Nike has done its best to downplay its layoff announcement, arguing that software investment for the FuelBand would continue, and that it hasn't entirely ruled out further sales on the hardware side. Even if an iWatch does become reality, that won't necessarily spell disaster for Nike and the FuelBand, especially if the iWatch aims itself more at general-purpose technology rather than fitness-specific applications.

Source: AT&T.

AT&T dropped 1.2%, which was still enough to outperform its telecom archrival in the Dow. Ordinarily, when a prime competitor issues an earnings report that sends its stock stumbling, you'd expect that a company would see a share-price boost. But the problem is that the entire telecom sector is going through struggles that affect all of its players, and part of the competitive pressure that's pushing AT&T and its wireless-network peers down today is coming from outside the traditional telecom realm. With cable companies, tech giants, and other non-traditional entrants making a play at key markets like broadband Internet and video, what hurts one telecom company also hurts AT&T. Although you can expect AT&T to keep fighting against its direct competitors, the group will have to be careful to protect itself as a whole from competitors in other industries seeking to provide the same services.

Earnings headlines are always compelling, but it's important to look beyond them to identify other companies that will be affected by news. That way, you can stay one step ahead of the headlines, and avoid unpleasant surprises down the road.

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