CWS Market Review – April 7, 2026

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On Tuesday, the stock market rose for its fifth day in a row. While that rally has been good to see, I tend to be skeptical of any stock market rally that comes in the midst of a larger selloff. Wall Street loves to throw head fakes and phony rallies our way.

A good sign of a true turnaround is when the S&P 500 crosses above its 50- and 200-day moving averages. We’re still a long way from that happening.

The stock market’s last all-time high was on January 27. Interestingly, the drawdown really didn’t start moving until February 25, but since then, the S&P 500 hasn’t been able to get much momentum against the bears.

Frankly, Tuesday was a rather blah day for the markets. At one point, shares of Apple were down by 5%. There was talk of engineering delays in its foldable iPhone. Shares of Home Depot, Trade Desk and Kimberly-Clark all made new 52-week lows today.

There are a few things coming soon that could alter Wall Street’s outlook. The first would be a quick resolution to military operations against Iran. I wouldn’t even try to guess what could happen, or when, but this is a major concern for investors. The price for oil has been rallying again. Oil has recently been as high as $115 per barrel, and it’s not far from its big jump at the start of this conflict.

Another big event coming our way will be Q1 earnings season. The unofficial kickoff of earnings season comes next Tuesday, April 14. That’s when JPMorgan, Citigroup, Wells Fargo, BlackRock and Johnson & Johnson are due to report. Not long after that, the earnings reports will come in a big flurry.

The big banks tend to report early in the earnings season. In fact, Goldman Sachs will report on Monday, but it may be the only major bank that will do that.

The other big event will come at the end of April when the Federal Reserve meets again. It’s very doubtful that the Fed will make any move on interest rates, but we may learn more what the Fed has planned for later this year.

At the moment, Wall Street seems unconvinced that the Fed will do much of anything over the next several months. In fact, traders don’t expect any move—up or down—from the Fed over the next 12 months.

Dissecting Nike’s Fall

In today’s issue. I want to take a closer look at Nike (NKE). The former all-star is stuck in the mud, and it can’t seem to do anything right.

As investors, we want to look at any lessons we can draw from Nike. It’s a good reminder that in a free enterprise system, no company is safe. Time and chance happeneth to us all.

Here’s a weekly chart of the last five years:

Last week, shares of Nike got taken to the woodshed. In one day, the sneaker company lost over 15% of its value, and it’s continued to slide from there. Nike had been falling going into last week’s big drop. In fact, Nike has been sliding for a few years.

As investors, it’s important for us to examine why and how good companies can go off the rails.

Since Nike’s all-time high in November 2021, the stock has fallen more than 75%. Remember that on Wall Street, one 75% drop is effectively two back-to-back 50% drops. This is a massive reversal of fortune. In the 37 years prior to Nike’s peak, the stock gained 18,000%, and that’s before dividends.

What went wrong? The short answer is—everything. The stock is back to where it was 12 years ago. Nike now has a market value of about $62 billion which makes it the smallest member of the Dow Jones Industrial Average. For some perspective, Nvidia is about 70 times more valuable than Nike.

It’s as if they looked at the competitive landscape and then decided to do everything wrong. There are a lot of lessons to be learned here.

Nike held an all-hands meeting this week. CEO Elliott Hill, who was called out of retirement to lead the sneaker outfit, said, “I’m so tired, and I know you are too, of talking about fixing this business.”

Nike beat earnings, but the details were not good. For the quarter, Nike made 35 cents per share on revenue of $11.28 billion. Wall Street had been expecting 28 cents per share, Still, there are many problems for Nike. For example, Nike’s margins continue to shrink, and sales in China fell by 7%.

Sales are basically flat in North America even though earnings are getting smaller. Nike said that sales will fall between 2% and 4% this quarter, and sales in China are expected to be down by 20% for the year.

Flat sales and lower margins mean they’re slashing prices just to tread water. That’s the thing about business: there’s no easy way out of a lousy product.

Here’s a chart that says a lot. This is NKE’s percentage gain over the last 40 years:

What’s particularly frustrating is that Nike has already been in turnaround mode, but it’s simply not showing results. The company said it needs more time, but at some point, they need to rethink their strategy. Shareholders have been very patient, and now they’re not. The benefit of telling shareholders that you’re in a turnaround strategy is that it grants you leeway to make major changes, but Nike hasn’t done that.

The company, especially previous management, made several missteps. For example, Nike placed too much emphasis on direct-to-consumer (DTC) sales. This came at the expense of their partners for wholesale business (think department stores).

This move completely backfired. This strategy alienated retailers, who then gave more shelf space to Nike’s competitors. The wholesale numbers have gotten a little better, but that took a lot of discounting, and that comes at the expense of margins.

Nike also tended to rest on its laurels. They assumed their old best-sellers would carry the load. With footwear, you have to be fresh. That means sports and athletes. Once your shoe becomes uncool, your competitors will eat you alive.

Nike’s other big problem is China. Nike had done well in China, but domestic competition and a bloated inventory of older shoes drove China’s business down. Sales in China are expected to be down by 20% this year.

Then there are tariffs. Oh boy, this a tough one. Nike’s shoes are made in the developing regions of Asia, particularly China and Vietnam. New U.S. tariffs are expected to add over $1 billion in costs. That will hit gross margins. Nike is working to diversify its supplies, but that will take time.

There are some reasons for (limited) optimism. Wholesale is looking a little better. Margins could stabilize soon. The brand is still strong, and it’s known all over the world. Of course, the stock price is low. Or it’s lower than where it was.

In FY 2024, Nike made close to $4 per share. This year, they’ll probably make $1.50 per share. Next year, maybe $1.85 per share. Is that worth $42 per share? Not to me. I won’t even consider Nike until the company has shown evidence that business has improved.

That’s all for now. The GDP report will be this Thursday, and the CPI report will be on Friday. Stay tuned! I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on April 7th, 2026 at 7:39 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.