Investors were slightly concerned Friday morning about some of the geopolitical pressures that are starting to make their way into the financial market. In particular, moves from China to change its relationship with Hong Kong aren't sitting well with some U.S. government officials, and the potential for icier relations between China and the U.S. reawakened fears from last year's trade disputes. Just before 11 a.m. EDT today, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 237 points to 25,164. The S&P 500 (SNPINDEX:^GSPC) fell 22 points to 3,007, and the Nasdaq Composite (NASDAQINDEX:^IXIC) dropped 31 points to 9,338.

On the earnings front, investors had to deal with some bad news from a couple of high-profile companies. Marijuana giant Canopy Growth (NASDAQ:CGC) had particularly disappointing results in its most recent quarter. Although Costco Wholesale (NASDAQ:COST) has gotten a lot of attention for empty store shelves due to runs on consumer goods by its members, even its quarterly results reflected some of the challenges that companies across the economy are facing due to the coronavirus pandemic.

No new high for Canopy Growth

Canopy Growth saw its stock fall more than 20% Friday morning. The cannabis company's fiscal fourth-quarter financial results were surprisingly poor, casting a shadow over the entire marijuana industry's prospects as a viable investment opportunity.

Canopy reported a 76% rise in full-year revenue during 2019 compared with 2018, but quarterly numbers were a lot less exciting. Revenue of 107.9 million in Canadian dollars ($78.4 million) was up just 15% from year-ago levels and actually down 13% from where sales were three months ago. Net losses for the period amounted to CA$1.3 billion, of which CA$743 million in restructuring charges and an additional CA$100 million impairment charge were especially noteworthy.

Worker with hairnet and blue gloves working near a cannabis plant.

Image source: Canopy Growth.

Several factors hurt Canopy. The company had to close its retail stores for part of the quarter due to the pandemic, and sales to other business customers saw even larger sequential declines because of evaporating demand for flower and pre-rolled joint products.

The big question is whether Canopy will see sales pick back up once the pandemic is better contained. For now, though, marijuana investors aren't waiting to see what happens.

Sales growth isn't enough for Costco

Shares of Costco, meanwhile, fell almost 2% Friday morning. The company's fiscal third-quarter financial report showed impressive top-line gains, but investors weren't happy with what they saw on the profit front.

Costco saw revenue rise more than 7% from year-ago levels, with same-store sales gains of 7.8% after adjusting for the impacts of gasoline prices and foreign exchange rates. Domestically, U.S. comps were higher by 8%, with relative weakness in Canada weighing down double-digit gains in other international markets. Costco saw especially strong gains in its e-commerce-driven revenue, which soared 66% from year-ago levels on an adjusted basis.

The problem, though, was that Costco's higher costs wiped out rising revenue. Net income was down 7.5% year over year, with Costco blaming $283 million in costs for incremental wage payments and sanitation procedures related to the pandemic. A 5% rise in revenue from membership fees wasn't enough to offset the nearly 14% jump in overhead expenses for the warehouse retailer.

Some investors fear that higher expenses to keep employees safe will become a new normal in the retail industry. Shareholders don't like what they're seeing at Costco, but it's uncertain whether those higher costs will be temporary or will remain in the months and years to come.

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