Tuesday morning initially brought a big bounce to the stock market, with market participants looking hopefully to the federal government for fiscal stimulus measures. Yet by late morning, most of the optimism on Wall Street had faded. As of 11 a.m. EDT, the Dow Jones Industrial Average (^DJI 0.56%) was up 208 points to 24,059. The S&P 500 (^GSPC -0.88%) rose 35 points to 2,782, and the Nasdaq Composite (^IXIC -2.05%) gained 130 points to 8,081.

The COVID-19 outbreak remained front and center in the consciousness of investors, and United Airlines Holdings (UAL -0.08%) took further measures to try to stem the tide of potential losses in the wake of plummeting passenger counts. For Stitch Fix (SFIX -2.28%), however, it was a more pedestrian disappointment at earnings results that prompted a substantial decline in the growth stock.

Falling apart at the seams

Shares of Stitch Fix plunged 28% after the mail-order clothing service reported its fiscal second-quarter financial results. The company continued to see signs of growth, but concerns about its near-term future weighed on investor sentiment.

Stitch Fix box on doorstep in front of purple door.

Image source: Stitch Fix.

Stitch Fix's numbers from the quarter included a 22% rise in net revenue from the year-ago period. The number of active clients in Stitch Fix's subscription service was up 17% to 3.5 million, and the company also got more revenue from each of its clients on average. However, net income was down 4.5% year over year.

Stitch Fix sees its growth rates slowing in the near future. Its fiscal third-quarter guidance included growth rates in sales of just 14% to 16%, and full-year fiscal 2020 sales will see growth slow to the mid- to upper teens on a percentage basis. The company pointed to higher customer acquisition costs, the impact of Brexit on its U.K. business, and the "fluid situation" regarding the coronavirus.

CEO Katrina Lake remains excited about Stitch Fix's future, but investors don't seem to have the same confidence. Even with a business model that seems tailor-made for customers who don't want to leave their homes, Stitch Fix hasn't been able to give shareholders the reassurance they wanted in troubled times.

Looking at losses at United

Meanwhile, shares of United Airlines Holdings climbed 4%. Investors took some heart at the fact that the airline isn't holding anything back in its response to the COVID-19 outbreak, but that doesn't change the size of the challenge United is facing.

United said Tuesday that it has seen rising trip cancellations and falling demand for travel both domestically and internationally. The airline expects to keep making capacity reductions extending into the future in response to reduced demand until conditions improve, but it still expects to lose money.

In response, United is taking steps to boost its balance sheet strength. The airline will defer non-critical projects, halt stock buybacks, and keep tight controls on capital expenditures. CEO Oscar Munoz and President Scott Kirby also agreed to forgo their entire base salaries through June 30. Furthermore, United arranged for a new $2 billion credit facility, with the intent of supplementing the $6 billion in cash and short-term investments it already had available.

The entire airline industry has gotten thrown for a loop by the outbreak, and it's far from clear when travel plans will return to normal. Investors are glad to see United taking steps to protect itself, but the airline still has a lot of uncertainty ahead of it.