What happened

Clothing retailer American Eagle Outfitters (AEO 1.64%) was down as much as 5.3% on Wednesday, with the stock price ending the day at $11.24 -- down 4.5%.

All the major indexes finished lower once again on Wednesday, but American Eagle suffered from an analyst lowering its price target, as well as cloudy earnings news from competitors

So what

American Eagle Outfitters, a clothing retailer primarily for teens and young adults, likely sank, in part, to Telsey Advisory Group lowering its price target on Wednesday. Telsey lowered the target from $17 to $15, citing inflation pressures on retailers and consumers that will create a challenging economic environment in the second half of the year.

Also, one of its competitors, Express, reported earnings Wednesday and had a mixed bag, beating earnings estimates but falling short of revenue expectations. Express expects sales to decrease by mid-single digits in the third quarter and lowered its earnings and revenue guidance for fiscal year 2022.

Now what

Express' outlook is not rosy, either for it or competitors like American Eagle. Gap, which reported earnings on Aug. 25, saw revenue decline by 8% year over year in the second quarter and it withdrew its guidance for the rest of the year -- which signals it also won't hit its previous projections. 

This probably doesn't give investors a lot of confidence in American Eagle as it heads into the second half of the year, given the state of inflation and the economy. American Eagle reports second-quarter earnings on Sept. 7, so it will be interesting to see how it stacks up, but the near-term outlook probably won't be any better than its competitors'.