Despite promising economic data, stocks are falling Thursday morning as oil prices continue to rise and apparel giants face backlash over alleged ties to forced labor, all while technology firms continue to underperform.
Shortly after the market open, the Dow Jones Industrial Average slipped 144 points, or 0.5%, while the S&P 500 shed 0.3%, and the tech-heavy Nasdaq, which plunged 2% Wednesday, fell 0.4%.
Heading up losses in the S&P, shares of Nike, up a staggering 65% over the past year, are slipping 6% amid a social media firestorm over claims that the apparel-maker has been sourcing raw materials from China’s Xinjiang Uyghur Autonomous Region, an area U.S. officials have said contain sprison-like “re-education” camps for the area’s mostly Muslim Uighur population.
On the earnings front, shares of Olive Garden-parent Darden Restaurants are soaring 5% and leading the S&P after a better-than-expected earnings report Thursday morning that included net sales of $1.7 billion; the company also said it will now pay every hourly worker at least $10 an hour.
Meanwhile, oil prices are plunging again after a brief recovery on Wednesday, with the price of U.S. benchmark West Texas Intermediate falling 3.1% Thursday morning, tanking energy stocks like EOG Resources, Occidental Petroleum and Pioneer Natural Resources by about 3% each.
Unemployment claims, on the other hand, are promising, falling sharply to 684,000 last week as vaccine rollouts and lifted lockdown restrictions allow more businesses to reopen.
“We are generally very bullish on corporate fundamentals and feel strongly that the U.S. pandemic will come to an end in May,” Vital Knowledge Media Founder Adam Crisafulli said Thursday morning. “However, we have three near-term concerns that keep us wary of the S&P, especially when it crosses above 3,900 points [currently at 3,890]: earnings obstacles that will make for a noisy first-quarter reporting period, the potential for tax hikes by the fall and the timing of Federal Reserve tapering.”
In another sign the economic recovery could be gaining momentum, the Bureau of Economic Analysis’ estimate for fourth-quarter gross domestic product growth was revised to 4.3%, a slight increase from the February estimate of 4.1%. The BEA on Thursday said the increase reflects “both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the Covid-19 pandemic, including new restrictions and closures that took effect in some areas of the United States.”