Why Nike Shares Are Nosediving Today

Nike Inc NKE shares are trading lower by 6.44% to $106.14 Thursday afternoon in sympathy with the overall market.

Companies in the broader consumer discretionary sector are experiencing marked weakness after the Federal Reserve Wednesday afternoon raised its target fed funds rate by 75 basis points to a new range of between 1.5% and 1.75%, its largest interest rate hike in 28 years. The Fed's actions to cool the economy and curb inflation could drive a slowdown in economic growth, which would impact consumer spending on discretionary products.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the Fed said in a statement… Read More

Following the Fed decision, the 10-year US Treasury yield has spiked, which has continued to pressure valuations in 2022. The 10-year Treasury yield hovered around a 5-year high of 3.495% Thursday morning before dipping to around the 3.398% level. 

When key interest rates rise, the value of future cash flows is reduced for stocks, which in turn lowers the value of the stock.

See Also: Federal Reserve Raises Interest Rates by 0.75%, Hikes Inflation Estimates

According to data from Benzinga Pro, Nike has a 52-week high of $179.10 and a 52-week low of $103.46.