The stock market saw a substantial downturn on Friday morning amid worries that global economic growth could be even weaker than previously thought. Growing concerns about whether the U.S. can continue to hold off pressure from abroad also weighed on sentiment. As of 10:20 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 211 points to 25,751. The S&P 500 (SNPINDEX:^GSPC) fell 21 points to 2,834, and the Nasdaq Composite (NASDAQINDEX:^IXIC) dropped 63 points to 7,776.
A couple of stories highlighted the various conditions that companies across the market face right now. Nike (NYSE:NKE) revealed its latest financial performance late Thursday, and investors weren't happy with what they saw. Meanwhile, Boeing (NYSE:BA) saw its woes continue as customers assessed their relationships with the aerospace giant.
Nike takes a tumble
Shares of Nike were down almost 5% after the athletic footwear and apparel giant reported its fiscal third-quarter financial results. Despite the fact that sales grew and the company reversed a year-ago loss with a sizable profit, investors weren't satisfied with Nike's overall performance.
Revenue at Nike rose 7%, and a strong dollar held back what would've been currency-neutral growth of 11% on the top line. Yet that represented a slowdown from faster growth rates in recent quarters, and investors had particularly hoped to see a stronger performance in the key North American market. Footwear results were good in North America, with sales climbing 9%, but apparel and equipment gains of just 2% held the company back. Moreover, despite strong growth in the Chinese market, Nike wasn't able to deliver favorable results in Europe or the rest of its Asian and Latin American markets.
Even with results that didn't meet expectations, Nike did show that its strategy toward emphasizing its retail and e-commerce capabilities has paid dividends. The Nike Direct unit saw sizable gains, with both its Nike stores and its online digital commerce channel seeing substantial growth. That won't stop Nike from continuing to use its existing third-party retail distribution channels to saturate the rest of the market and take full advantage of high demand, but it does mean that investors should watch for the footwear giant to try to squeeze more profit from its efforts to cut out intermediaries.
Boeing loses a sale
Meanwhile, Boeing shares were down 2% following news that one of its aircraft customers had decided to cancel a large order of jets. Garuda, which is an airline in Indonesia, reportedly decided not to go forward with a $6 billion order of Boeing 737 MAX aircraft.
Garuda's explanation for the move centered on the response that the airline has gotten from some of its passengers. CEO Ari Askhara said that some Garuda customers were scared to go on a MAX 8 following the two high-profile crashes of MAX 8 planes over the past six months. The first crash happened off the coast of Indonesia, bringing the tragedy home to Garuda's key passenger base.
The cancellation of Garuda's order for 49 aircraft won't necessarily in itself be a critical loss for Boeing, especially if the airline decides to replace the order with aircraft from some of Boeing's other model lines. Yet many fear that it could represent the beginning of a long series of possible moves by other Boeing customers. If the loss of confidence in the 737 MAX 8 starts to pick up steam, then the consequences could eventually add up to much larger problems for the aerospace giant in the years to come.