The stock market has done well lately, but Thursday morning brought a quick reversal to its recent gains. New data showed that first-time claims for unemployment benefits remained at elevated levels, with this week's 1.31 million number extending a streak of more than 1 million claims every single week since mid-March. Just after 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 409 points to 25,658. The S&P 500 (SNPINDEX:^SPX) had fallen 39 points to 3,131, and the Nasdaq Composite (NASDAQINDEX:^COMP) had dropped 69 points to 10,424.

Earnings season is just about to ramp up again, and a couple of companies got an early start on telling investors how they're faring. Unfortunately, both Bed Bath & Beyond (NASDAQ:BBBY) and Walgreens Boots Alliance (NASDAQ:WBA) weren't able to satisfy their shareholders. That could set a negative tone that could dampen hopes for a summer stock market rally.

Bad beyond expectations

Bed Bath & Beyond's shares plunged 23% Thursday morning as investors reacted to its release of fiscal first-quarter results late Wednesday night. It wasn't surprising to see the home goods retailer's numbers come in weak, but the extent of that weakness shocked many who follow the stock.

Top of storefront showing Bed Bath & Beyond logo.

Image source: Bed Bath & Beyond.

Bed Bath & Beyond's sales plunged by nearly half during the quarter, with temporary store closures being the primary reason for the drop. Even an 82% rise in sales from the retailer's digital channels wasn't enough to ease the damage. The company lost more than $300 million, which was worse than most had expected.

It's always a bad sign when a company leads its press release with a statement on its liquidity, and that's what Bed Bath & Beyond did. The retailer assured investors that cash and short-term investments of $1.2 billion and a new $850 million asset-backed credit facility should help it weather the pandemic's financial impacts. But investors are more worried that the problems that existed long before the coronavirus appeared could end up being insurmountable under current circumstances.

CEO Mark Tritton tried to focus on improved performance in June after the end of the fiscal quarter. However, Bed Bath & Beyond didn't provide an outlook for the remainder of the year, and that signals continued uncertainty about how well the retailer will be able to recover.

Walgreens doesn't look as healthy as hoped

For Walgreens Boots Alliance, today's 10% drop is also related to COVID-19's impacts. Fiscal third-quarter results showed signs of weakness, and Walgreens was careful to warn that there could be further damage from the pandemic in the rest of 2020.

COVID-19 cost Walgreens between $700 million and $750 million during the quarter, with most of the pain coming from non-U.S. operations. Just about all of that reduced revenue fell down to the operating income line, costing the company about $0.61 to $0.65 per share in prospective earnings. As a result, revenue inched higher by just 0.1%, and adjusted earnings per share plunged 44% from year-ago levels.

Interestingly, Walgreens' domestic business held up reasonably well. U.S. retail pharmacy sales were higher on increased consumer spending on brand-name drugs and specialty prescriptions. However, the U.K. market remains extremely weak, and Walgreens warned that it could prove to be a headwind to results in the fiscal fourth quarter as well.

Investors are still weighing what net impact the coronavirus pandemic will have on drugstore retail chains like Walgreens. For now, though, they're adopting a conservative view, and the stock price is adjusting lower as a result.