The stock market behaved reasonably well on Tuesday, giving investors modest gains as a key meeting of the Federal Reserve began. The two-day meeting will determine the immediate future of short-term interest rates in the U.S., and even though most investors were confident as recently as a month ago that the Fed would be slow in boosting rates, more recent events have called the central bank's dovish stance into question.
Today's quiet trading seemed to be the calm before a potential storm, but investors will probably be pleased with any clarity that comes out of the meeting, even if the eventual news is bad. Still, some stocks struggled today, and among the worst performers were Encana (NYSE:ECA), HNI (NYSE:HNI), and GoPro (NASDAQ:GPRO).
Encana gets the capital it wants -- at a price
Encana fell 8% after the energy giant announced the pricing on a massive secondary offering of stock. The company ended up selling 107 million shares of common stock at $9.35 per share, producing gross proceeds of just over $1 billion. The company said it plans to use about half of the proceeds from the offering to fund a portion of its expected capital expenditures for 2017. With Encana seeking to take advantage of all of its opportunities in the booming Permian Basin region, investors hope the company will prove successful. Yet the capital raise will significantly dilute existing shareholders at a stock price far below the best levels Encana has seen in recent years.
HNI sees stormy times ahead
HNI lost almost a quarter of its value in the wake of its announcement Monday night that its business won't do as well as it had previously thought. HNI cut its guidance for the third quarter and the full 2016 fiscal year, now projecting that it will see a 4% to 7% drop in sales for the third quarter. The maker of office furniture also said earnings would be about 17% below its previous guidance, offering a new range of $0.74 to $0.79 per share. CEO Stan Askren said economic uncertainty is leading some customers to pull back on purchases, and that led to a longer-term guidance cut of $0.25 to $0.30 per share on full-year earnings estimates. That's about 8% to 10% below its previous guidance, and HNI thinks sales could fall as much as 6% year over year. Investors can't be too shocked at tough conditions in the market, given the general state of the economy, but the extent of the downgrade clearly came as a surprise.
GoPro doesn't make a splash
Finally, GoPro fell 7%. The maker of cameras for extreme sports and other high-intensity uses gave back all of its gains from yesterday and then some, as investors apparently evaluated the release of the new Karma drone product as being insufficient to justify new excitement about the stock. Although some features of the new drone and its accessories are interesting and could spur new interest among users, the Karma leaves out some features that rival drones have included. The real proof will come when the holiday shopping season starts, but investors seem worried that GoPro won't be able to produce the big win it needs to pull its stock out of its current funk.