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Pre-Markets Start Digging Out of Hole

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Tuesday, December 21, 2021

Pre-market futures are partially digging themselves out of another hole they dug for themselves in Monday trading, with fears of the Omicron wave hampering global productivity and raging through the U.S. this holiday season. The Dow is +288 points at this hour, after falling -433 points yesterday; the Nasdaq is putting back+172 points at this hour from the -188 it shed Monday; and the S&P 500 is +42 points, climbing back from the -52.6 points lost in yesterday’s regular session.

These indexes are now waxing and waning off big round numbers investors have been paying attention to: the Dow is back up over 35K again this morning, the Nasdaq has again crossed above 15K and the S&P has creeped back over 4600. Year to date, the Dow is now +15 1/2%, the Nasdaq +23 1/2% and the S&P 500 +18%. At this point, we appear to be slouching toward the end of 2021 after a few months striking new all-time closing highs day after day.

Yesterday afternoon, Zacks Rank #4 (Sell)-rated Nike (NKE - Free Report) surprised markets in its fiscal Q2 report, with earnings of 83 cents per share beating estimates by a solid dime on revenues of $11.36 billion, which were also nicely ahead of Zacks consensus. The company saw its best results in North America, +12% year over year, countered by -20% in China for the quarter.

The weakness in its Chinese market has been attributed to the closure of its Vietnam factory, which was struck by a fresh wave of Covid during the quarter, and Nike took a big hit in productivity. Shares are +4% in today’s pre-market, now up +16% year to date — still an underperformer on the Dow 30 exchange.

Microchip memory solutions developer Micron (MU - Free Report) also put up better-than-expected numbers Monday afternoon, for its fiscal Q1 results: earnings of $2.16 per share topped the Zacks consensus by 6 cents per share, while revenues of $7.69 billion inched ahead of the $7.66 billion in the quarter, +33% year over year.

Further, Micron upped guidance for its fiscal Q2 on both earnings and revenues. The company saw some clear supply constraints in the quarter, although demand was reportedly still strong. We will check any change to the status of Micron’s Zacks Rank #3 (Hold) on the increased guidance numbers. Shares are +8.5% this morning; previously, it had only been +10.8% year to date. For more on MU's earnings, click here.

Finally this morning, we see a much steeper drop in the U.S. Current Account Deficit for Q3: -$214.8 billion was worse than the -$205.5 billion expected and the -$198.3 billion from the previous quarter. This metric tracks the imbalance between import and export goods, and marks the weakest quarter in five full years. This -$214.8 billion figure accounts for 3.7% of U.S. GDP.

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