Wall Street rally fizzles out as Evergrande worries persist; Nike drops

A man walks through the rain on Wall Street outside the New York Stock Exchange October 9, 2019. — Reuters pic
A man walks through the rain on Wall Street outside the New York Stock Exchange October 9, 2019. — Reuters pic

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NEW YORK, Sept 24 — US stock indexes fell today following a two-day rally, as worries persisted about the spillover from debt-laden China Evergrande, while Nike tumbled after cutting its sales forecast.

Six of the 11 major S&P sectors advanced in early trading, with economy-sensitive energy, financials and defensive utilities shares leading gains. Technology and consumer discretionary were the biggest losers.

Nike Inc dropped 6.5 per cent to weigh the most on the Dow and the S&P 500 after warning of delays during the holiday shopping season, blaming a supply chain crunch.

Shares of peer Under Armour also fell 3 per cent, while footwear retailer Foot Locker dropped 5.7 per cent.

“There is a real risk that companies are going to miss earnings expectations despite there being strong demand for their products and services,” said Russ Mould, investment director at AJ Bell.

“The cost pressures are so clear that widespread downgrades to profit margins seem inevitable in the coming months.”

At 9.49am ET, the Dow Jones Industrial Average was down 51.14 points, or 0.15 per cent, at 34,713.68, the S&P 500 was down 10.93 points, or 0.25 per cent, at 4,438.05, and the Nasdaq Composite was down 99.60 points, or 0.66 per cent, at 14,952.64.

Wall Street’s main indexes have been roiled this month by fears of a sooner-than-expected tapering by the Federal Reserve and the crisis at Evergrande, which yesterday missed an interest payment deadline and has entered a 30-day grace period.

The benchmark S&P 500 is now on course to snap a seven-month gaining streak.

On the week, however, the index was nearly flat, with investors assessing signals from the Fed that it would reduce its monthly bond purchases as soon as November and that interest rates could rise quicker than expected.

“We are taking some breather (from the two-day rally), (but) there is some uncertainty out of China that the market wants a little clarity on,” said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

“But, effectively the trajectory is positive into year-end and we should see some further modest appreciation of the general indices.”

The S&P 500 value index is up nearly 0.7 per cent this week, outperforming its tech-heavy growth counterpart and on track to break a three-week losing streak.

Mega-cap growth names Alphabet Inc, Microsoft Corp, Amazon.com Inc, Facebook Inc, Apple Inc and Tesla Inc slid between 0.3 per cent and 0.9 per cent.

Shares of cryptocurrency-related firms Coinbase Global, MicroStrategy Inc, Riot Blockchain and Marathon Patent Group tumbled between 3.1 per cent and 6.5 per cent after China’s central bank vowed to crack down on cryptocurrency trading.

Declining issues outnumbered advancers for a 2.20-to-1 ratio on the NYSE and for a 2.79-to-1 ratio on the Nasdaq.

The S&P index recorded 10 new 52-week highs and four new lows, while the Nasdaq recorded 25 new highs and 29 new lows. — Reuters

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