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Coronavirus, new home sales, Nike earnings: What to know in markets Tuesday

Heidi Chung

The coronavirus pandemic continues to rage, with no signs of cooling off. Cases in the U.S. are on the rise with more than 41,700 confirmed cases and approximately 573 deaths as of Monday evening, according to John’s Hopkins. The rapid spread and the inability of Congress to approve a massive fiscal stimulus bill hammered stocks on Monday. The Dow (^DJI) tumbled 582.05 points, while the S&P 500 (^GSPC) sank 2.95% and the Nasdaq (^IXIC) declined 0.27%.

New home sales

Meanwhile, investors will get another read on the U.S. housing market with the release of February’s new home sales data Tuesday morning. Analysts project that new home sales in February fell 1.8% from last month to a seasonally adjusted rate of 750,000.

“The housing market expanded strongly owing to lower rates in 2019, but we suspect the trend is unlikely to repeat this year given the major disruption from the COVID-19 outbreak. We expect prospective buyer foot traffic to decline as more adopt ‘social distancing,’ which will hurt home sales too,” Bank of America said in a note March 20.

February’s new home sales figures come on the heels of last week’s stronger-than-expected existing home sales. However, the data reflected contracts signed in January and February and did not capture the impact of COVID-19. Economists expect the housing market data in March will show a major slowdown in homebuying activity.

“Housing data remained healthy in February, ahead of the expected negative impact from the outbreak of COVID-19,” Nomura wrote in a note March 20. “The NAHB housing market index remained at an elevated level, reflecting strong consumer demand. However, recent declines in this index partly reflect a slowdown in buyers’ interest and poses downside risk to the housing market. While long-term mortgage rates fell, disruptions caused by the outbreak will likely more than offset support from low interest rates.”

Nike earnings

Market participants will be paying close attention to shoe giant Nike’s (NKE) results when it reports Tuesday after the closing bell. Nike is expected to report earnings of 58 cents per share on $9.87 billion in revenue during its fiscal third quarter.

Nike was among the first group of retailers to announce store closures in response to the COVID-19 pandemic. The Beaverton, Ore.-based company closed all 384 retail stores in the U.S. from March 16 to March 27. Despite the massive store closures, the company is expected to fare well in the long term, according to Raymond James.

“Nike has demonstrated a very impressive performance during prior recessions,” analyst Matthew McClintock said in a note March 19. “We believe a large reason for this performance has been global growth and distribution gains. However, we believe this strength is largely a testament to the idea that good product sells even in bad times, and NKE's history is filled with strong innovation launches of great product.”

McClintock also noted that there will likely be pent-up demand to surface following the coronavirus crisis. However, because Nike is a global brand, it will not be immune to the effects of the virus. “We note the company faces significant challenges related to the Coronavirus. First and foremost, the company likely has a substantial amount of global inventory that hasn't sold and needs to be cleared before new innovation can launch.”

Management’s commentary regarding COVID-19’s impact on business will be critical. Shares of the shoemaker have plunged 38% this year.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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