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What Happened in the Stock Market Today

By Demitri Kalogeropoulos – Nov 30, 2016 at 5:42PM

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Why American Eagle and GoPro stocks stood out as indexes put in a mixed performance.

Image source: Getty Images.

Stocks finished mixed on Wednesday as the Dow Jones Industrial Average (^DJI 1.26%) didn't budge and the S&P 500 (^GSPC 1.44%) shed about 0.25%.

Today's stock market


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Data source: Yahoo! Finance.

Oil prices surged by over 8% after OPEC announced an agreement to lower production. That move helped energy stocks and produced a 9% gain for the United States Oil Fund (USO 1.72%) as the highly leveraged Velocity Shares 3X Long Crude Oil Fund (UWT) soared 25%.

Meanwhile, American Eagle Outfitters (AEO 2.05%) and GoPro (GPRO 2.44%) attracted heavy investor interest following big operating news from the companies.

American Eagle Outfitters' growth stumble

American Eagle's stock lost 12% after a disappointing third-quarter earnings report. The clothing retailer's sales growth slowed to a 2% pace from 3% as customer traffic proved hard to find during the busy back-to-school shopping season.

Image source: Getty Images.

On the bright side, earnings improved by a solid 17% to mark more than two years of consistent profit gains. American Eagle's profit margin ticked up, too, as management held the line on price cuts. "I'm pleased that we continued to deliver strong results in a tough retail climate," CEO Jay Schottenstein said in a press release, "reaching record sales and marking the 9th consecutive quarter of profit improvement."

The retailer's outlook for the holiday quarter didn't give shareholders much to cheer about. In fact, the forecast implies a second straight quarter of decelerating growth as comparable-store sales come in basically flat. Given that the company gets a huge portion of its earnings over this period, and because third-quarter operating trends were underwhelming, it's no surprise that investors took a step back on a stock that had raced up 23% in the 12 months prior to Wednesday's earnings report.

GoPro's encouraging start

Sports camera manufacturer GoPro rose by as much as 5% before settling to a 2% gain following an update from management on its early holiday season sales trends. The company, which stumbled badly with its 2015 Hero camera release -- and with its more recent Karma drone launch -- has a lot riding on the success or failure of its new Hero 5 lineup.

Image source: GoPro.

That's why it's good news that consumers seem to be interested in the new camera. GoPro's data showed a 35% increase in Hero sales during Black Friday week for a solid start to the season.

"We have a lot of work to do to finish the quarter and our fiscal year, however our Hero 5 cameras have been well-received by critics and consumers alike," CEO Nicholas Woodman said in a press release.

A solid product release alone won't be enough to end GoPro's distressing run of net losses, though. To that end, Woodman and his team announced that the company is shedding 15% of its workforce, or 200 full-time positions.

The cuts should reduce operating expenses enough to give executives a good shot at achieving profitability by the end of next year. While investors will be happy to see the red ink stop gushing, they likely won't push the stock significantly higher until GoPro can put together a string of successful product launches in the camera, drone, and video-editing software spaces.

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool owns shares of and recommends GoPro. The Motley Fool has the following options: short January 2019 $12 calls on GoPro and long January 2019 $12 puts on GoPro. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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