Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The markets have hit their stride today after several straight outings in the red, and the Dow Jones Industrial Average (DJINDICES:^DJI) has been pleasing investors all day. The Dow retreated from this morning's triple-digit gains, but as of 2 p.m. EDT, the blue chip index still has pulled in gains of more than 25 points. Most Dow stocks are in the green, led by one index newcomer kicking off earnings season today. Let's catch up on what you need to know.
Will Nike impress?
Welcome back to earnings season! New Dow inductee Nike (NYSE:NKE) is taking over the spotlight with an earnings kickoff today, as the sports apparel company announces its quarterly results after the closing bell. Investors have pushed the firm's stock up 1.4% in anticipation of the release, but is Nike ready to impress?
Nike's stock has risen 34% year to date, but it could hit even greater heights if it beats out on analyst projections today. Wall Street's expecting earnings per share of 78 cents at the company, a gain of more than 23% from a year ago. The Street also projects sales of just under $7 billion for the quarter, an improvement of 4% on last year's first-quarter revenue.
China's been a sore spot for Nike investors lately, and some analysts are expecting sales in the world's second-largest economy to fall again in the first quarter. Disappointing Chinese results contributed to Nike's downbeat earnings last June that sunk the stock by more than 9% in a single day. While Nike's Chinese market is a point of concern, it's still only responsible for roughly 10% of total company sales -- so even a miss should be taken in context when compared to the company's sizable North American revenues.
Nike has managed to grow overall revenues sharply lately, with total revenue jumping 8% year over year in the company's most recent fiscal year. Nike's largest business by sales, its footwear segment, also posted 8% sales growth in that time, and it will need to keep surging for this stock to maintain its momentum. Rival Under Armour has been nipping at Nike's heels recently with strong sales growth and a push into footwear in direct competition with Nike's prized business. A strong financial performance will help Nike maintain separation from Under Armour at the top of its industry.
American Express (NYSE:AXP) is also on the upswing today, with the financial stock rising about 0.8% so far. The stock's been one of the Dow's best performers year to date with gains of 33% as U.S. consumer confidence has risen.
The company made more news this week, announcing yesterday that it's talking with Certares International Bank to spin off half of its business travel unit in a joint venture. American Express would still maintain a 50% ownership stake in the venture, although the firm's looking to shift away from its travel business as consumers manage travel more online. Travel fees have fallen recently at the company, although it's hardly been a hit: Such revenue only accounts for around 5% of the company's total revenues.
American Express's biggest business remains its lucrative credit card segment. The firm's U.S. card services division, its largest business by sales, posted 4.6% sales growth over the first half of the year. As long as credit card usage and fees continue to rise, American Express's outlook looks strong.