A stimulus bill is likely to pass Congress on Monday, but the stock market may be more concerned about a new strain of COVID-19 detected in the U.K. The Dow Jones Industrial Average (^DJI -0.09%) was down about 0.6% at 11:30 a.m. EST.

The $900 billion stimulus package includes direct payments to Americans, a boost to unemployment benefits, and an expansion of the Paycheck Protection Program, among other items. The bill is much smaller than the $2 trillion CARES Act passed in March, but it will still provide significant aid as the pandemic continues to rage ahead of widespread availability of vaccines.

The next few months could be worse than expected if a variant of the novel coronavirus detected in the U.K. spreads widely. The variant was first identified in September and could be 70% more transmissible than the original virus, according to experts. Many countries have now suspended flights from the U.K., and London has been placed under the strictest tier of lockdown measures.

While the stock market headed lower on Monday, shares of Nike (NKE 1.02%) soared after the footwear giant reported solid quarterly results. Shares of International Business Machines (IBM -0.94%) weren't so lucky after the tech giant announced its latest cloud acquisition.

The Jordan brand logo.

Image source: Nike.

Nike stock surges after earnings beat

Nike's fiscal second-quarter report on Friday afternoon beat analyst expectations across the board, leading investors to bid up the stock on Monday.

Nike reported revenue of $11.2 billion, up 9% year over year and $730 million higher than the average analyst estimate. The direct-to-consumer business grew by 32% to $4.3 billion, while digital sales soared 84%. Nike's growth was fueled by China, where overall sales were up 24% in the quarter.

The company continued to see lower revenue from the wholesale business and from company-owned stores. Nike temporarily closed some of its stores during the quarter, but around 90% of stores are now open. Retail foot traffic remains a challenge due to the pandemic, but Nike is seeing higher conversion rates.

Nike reported earnings per share of $0.78, up 11% year over year and $0.16 ahead of analyst expectations. The shift to direct-to-consumer has the potential to boost margins in the long run, but for now the pandemic is taking a toll. Gross margin dropped 0.9 percentage points to 43.1% due to promotional activity aimed at reducing inventory levels and restructuring costs. The bottom line rose thanks to lower operating expenses and higher revenue.

Analysts were quick to increase their price targets on Nike stock after the earnings beat. Bank of America now has a price target of $165; RBC Capital pushed its price target to $156; Stifel boosted its price target to $168; and Morgan Stanley set an optimistic price target of $176.

Shares of Nike were up about 4.4% Monday morning. The stock has now soared over 40% since the start of the year.

IBM makes cloud acquisition

Cloud implementation, application transformation, and managed services provider Nordcloud will be joining the IBM family after the century-old tech giant announced that it was acquiring European cloud company. Financial terms weren't disclosed. Nordcloud had an annual revenue run rate of more than 60 million euros in February of 2019, so the price tag may be in the hundreds of millions of dollars.

Citing estimates from Gartner and IDC, IBM expects the market for cloud professional services to surpass $200 billion by 2024. Nordcloud works with Amazon Web Services, Microsoft Azure, and Google Cloud Platform, and IBM will be keeping it that way. "IBM's open and flexible approach to advising, building, moving and managing clients' hybrid environments gives enterprises the freedom to choose from multiple providers to best meet their business and IT needs," reads IBM's press release announcing the deal.

IBM bet big on hybrid cloud computing with its $34 billion acquisition of Red Hat last year. Nordcloud is a much smaller acquisition, but IBM expects it to "turbocharge its hybrid cloud consulting capability."

Shares of IBM headed lower with the broader market on Monday, down about 3% by late morning. The stock has shed roughly 9% of its value this year.