Dow trades close to flat Friday as markets conclude the risky week with Nike and crypto shares falling
The S&P 500 and Dow Jones Industrial Average were nearly flat on Friday, ending a volatile week on Wall Street. A move by China to ban cryptocurrencies weighed on the tech sector, and Nike shares fell as supply chain problems due to the pandemic hit the sneaker giant.
The Dow Jones Industrial Average added 9 points, or 0.03%. The S&P 500 was down 0.03% and the Nasdaq Composite was down about 0.3%.
A tough crackdown on Bitcoin by China hurt market sentiment overnight, particularly in technology stocks that depend on crypto-related revenues. China’s central bank on Friday declared all activities related to cryptocurrencies to be illegal. Overseas crypto exchanges offering services in mainland China are also illegal, the PBOC said.
Bitcoin fell 5% and ether lost nearly 8% in response. The crypto exchange Coinbase, which generates most of its revenue from retail, lost more than 1.7%. Robinhood, which made more than half of its transactional revenue from crypto last quarter, lost more than 2%.
Meanwhile, Nike confirmed the fears of investors, worried about the pandemic, devastating supply chains and increasing costs for businesses, especially multinational corporations. Nike shares fell over 6% after the sneaker giant cut its outlook for fiscal 2022 due to a prolonged production shutdown in Vietnam, labor shortages, and long run times. Nike expects full-year sales to grow in the mid-single-digit range, compared to the previously forecast low double-digit growth.
The company also reported quarterly revenue that fell short of analysts’ expectations due to declining demand in North America due to the flare-up of the Delta variant. Other apparel manufacturers and retailers gave way. Under Armor lost about 2%.
Within the S&P, Nike’s decline was offset by gains on the reopening of stocks. Carnival Corp topped the index, up 4% after posting quarterly earnings, while other cruise lines and airlines rose about 3%. Energy and industrial stocks were also leaders. Mosaic and Nucorp added about 3%. Diamondback Energy was up 3% and Cabot Oil & Gas was up 2.5%.
It’s been a bad week for the markets. Stocks began a two-day recovery rally on Wednesday after the Federal Reserve signaled that there was no impending lift to its ultra-loose monetary policy. Investors are also betting that Chinese real estate giant Evergrande’s debt crisis will have no impact on global markets.
The blue-chip Dow rose 500 points on Thursday for its best daily performance since July 20. The S&P 500 was up 1.2% while the tech-heavy Nasdaq Composite was up 1%.
Investors were waiting to see if Evergrande, the failing developer at the center of the country’s housing crisis, would pay $ 83 million in interest on a US dollar bond due Thursday. The company has been silent so far and has 30 days before it fails technically.
Evergrande worries hit global markets earlier in the week, with the Dow dropping more than 600 points on Monday.
“If Evergrande fails, exposure outside of China seems limited and as the government will do whatever it takes to contain it,” said Edward Moya, senior market analyst at Oanda. “If China is successful, global risk-taking may not be affected as much.”
The Nasdaq underperformed the week’s major averages through Friday, after each of them ended on Green Thursday and recouped their losses from the beginning of the week. The Nasdaq is down 0.4% over the course of the week, while the Dow and S&P are up 0.5% and 0.3%, respectively.
Chinese stocks like Pinduoduo, JD.com, and Baidu were among the Nasdaq’s biggest falls.