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Nike, Costco Report Better Earnings than Expected

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Markets have filled in the gaps admirably this week from Monday’s deep crevasse, aka -2% selloff. The Dow, though off its intraday high +621 points, still finished up 507, +1.48% — its best single trading day since July 20. The Nasdaq closed back up over 15K again, adding 155 points or +1.04%.

The S&P split the difference between those two indexes, +1.21% on the day. Once again, the small-cap Russell 2000 beat the field, +1.82%, and is now outperforming the Dow, year to date.

This happened even as the stubbornly low 10-year bond yield finally came unsnagged and climbed to +1.43% on the day, its highest level since late June. The Dow is now trading in positive territory for the week, with only the Real Estate and Utilities sectors on the S&P slightly in the red today. Only cryptocurrencies have yet to make a meaningful jump in value from the lows we saw to start the trading week.

Flash Markit PMI for both Manufacturing and Services came in a bit below consensus estimates, at September headlines of 60.5 and 54.4, respectively, from expectations of 61.7 and 54.9, respectively. These both depict solid growth, if milder than had been anticipated for both sides of the domestic economy coin. It was the slowest Manufacturing print in five months, well off the record-high 63.4 reported in July. For Services, it was the slowest period since July 2020.

Nike (NKE - Free Report) has reported fiscal Q1 earnings results of $1.16 per share after the bell this afternoon, a 4-cent improvement on the Zacks consensus and notably better than the 95 cents per share reported in the year-ago quarter. Revenues of $12.23 billion, however, were light estimates of $12.54 billion in the quarter, though still up double-digits year over year. Shares are selling off -2% in late trading; the global retailer is underperforming major indexes year to date.

North America grew by a less-than-expected +15%, while China countered with a better-than-thought +11%. Gross margins were also improved over expectations to +46.5%, led partly by Digital sales gaining +29%. Inventories were flat year over year, illustrating the problem major retailers are seeing in supply chains. The company does not give guidance in the earnings release; we expect to get a forward look on the conference call.

Zacks Rank #2 (Buy)-rated Costco (COST - Free Report) easily surpassed earnings expectations for its fiscal Q4 to $3.76 per share from the $3.55 Zacks consensus.  Revenues of $62.68 billion in the quarter amount to roughly a 17% gain year over year. Comps came in at +15.5% for the quarter, on +11.2% growth in e-commerce. Again, we await discussion on the conference call to find out about supply chain issues at the company.

Finally, advisors for the Center for Disease Control (CDC) formally recommended a Pfizer (PFE - Free Report) /BioNTech (BNTX - Free Report) booster shot for nursing home residents, nursing home workers and anyone at or over the age of 65, as well as people between 19 and 49 years of age with underlying medical conditions. Because the Pfizer/BioNTech vaccine was the first to market under Emergency Use Authorization (EUA), it’s the first to be reviewed for a potential booster shot.

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