What happened

You've got to hand it to Federal Reserve Chairman Jerome Powell -- this guy really knows how to spook a stock market.

On Wednesday, the Fed chair warned investors, who have been hoping -- planning even -- on a V-shaped recovery from the recession just as soon as the COVID-19 shutdown is over, that they may have to wait a bit longer for things to improve. "Recovery may take some time to gather momentum," warned Powell, and while that's happening, "the passage of time can turn liquidity problems into solvency problems."  

The result: ExxonMobil (NYSE:XOM) shares down are 4.7%. Harley-Davidson (NYSE:HOG) stock is off 5%. General Electric (NYSE:GE) stock is down 6.1%.

3 colorful arrows all pointing down

Image source: Getty Images.

So what

Seriously? That's the whole reason that Exxon, Harley, and General Electric are down today? Apparently so.

There's no evidence of bad news that might be taking down any of these three major industrial companies today. The contrary is more accurate. Just yesterday for example, it was reported that Harley-Davidson's CEO had spent $2.1 million buying up shares of his company's stock (says TheFly.com).

Exxon stock won an upgrade today, albeit from a relatively unknown analyst, Redburn.   

And even if there's no good news spin on GE today, neither does there appear to be any bad news. No one's downgraded the stock, for instance, nor is there any sign of the stock's price target being adjusted lower.

Now what

Instead, what we're left with is a somewhat bearish note from the Fed Chairman, and concerns about liquidity and solvency hanging in the air. My best guess for why investors are selling off shares of Exxon, Harley, and GE, therefore, is that at the Fed Chair's suggestion, investors are taking a closer look at the balance sheets of these three companies, and finding that with net debt levels of $6.6 billion (Harley), $48.2 billion (Exxon) and $57.2 billion (Exxon), none of these three companies are entering the recession in the finest of financial fettles.

The longer this recession drags on, the worse things could get for companies trying to support mammoth debt loads.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.