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Dow Jones Futures: Nike Falls Late, Teaching 2 Key Lessons

Dow Jones futures rose slightly, along with S&P 500 futures and Nasdaq futures. Nike earnings and sales topped views, but the top Dow Jones stock retreated in after-hours action. Nike stock action highlights the risk of buying a stock just ahead of earnings. Secondly, investors shouldn’t put too much stock into overnight trading.




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Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures advanced nearly 0.3%.

During Tuesday’s stock market trading, the Dow Jones slid 0.3% and the S&P 500 0.1%. The Nasdaq composite climbed 0.2%.

Nike Earnings Top, Nike Stock Falls

Nike earnings rose 17.5% to 67 cents a share in the fiscal first quarter while sales grew 10% to $9.95 billion. Analysts expected 63 cents and $9.88 billion. But gross margin just missed some estimates as product spending grew 7%.

Nike stock fell 3.5% to 81.80. That would still be in buy range from an 81.10 flat-base entry. Nike has been the top-performing Dow Jones stock in 2018, up nearly 36% through Tuesday’s close at 84.79.


IBD’S TAKE:Buying or holding a stock can be risky heading into an earnings report. Here’s an earnings options strategy that can help you cash in on post-earnings stock gains, while minimizing the risk from a weak quarter.


Nike Stock Investing Lessons

But buying a stock just before earnings is a bit like playing roulette. You might be a winner, sometimes a huge winner, but stocks can tumble on earnings. If you want to buy a stock ahead of earnings, protect yourself with an options strategy.

Meanwhile, take extended trading with a huge grain of salt. Remember that overnight action doesn’t necessarily translate into actual trading in the next regular session, whether it’s Dow futures or Nike stock in particular.

Volume is lighter at night, though a large-cap stock like Nike does trade a lot. Investors also are digesting information on the fly. Analysts haven’t sent out notes explaining why a stock’s results are better or worse than the initial take.

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