There's been considerable uncertainty in the stock investing community lately. After a strong start to 2023, stock prices have gotten choppy in the summer months, and that has put many investors on edge. Wednesday morning, it looked as though markets might rebound modestly from losses over the past couple of days, but the gains that stock index futures implied were relatively small.

One problem investors face is that the consumer economy appears to be going through a slowdown. As interest rates rise, debt-ridden consumers have less money to spend, and that has forced them to prioritize what they buy. That's been bad news for Peloton Interactive (PTON 4.29%) and Foot Locker (FL 0.23%), as their most recent financial results have shown the impact of the pain consumers are feeling and are raising doubts about their ability to rebound.

Peloton hits all-time lows

Shares of Peloton Interactive plunged 30% in premarket trading on Wednesday morning. The move took the interactive fitness stock below $5 per share, an unprecedented low level since its 2019 initial public offering.

Peloton's fiscal fourth-quarter financial results for the period ended June 30 had almost no good news. Revenue fell 5% year over year to $642 million, led by a 25% drop in sales from connected fitness hardware. Losses narrowed significantly from the year-ago period, but Peloton still lost $424 million, or $0.68 per share. User counts fell by 5% to 6.5 million, and although connected fitness subscription counts were up 4% over the past 12 months to 3.078 million, the number fell by 29,000 since March 2023.

Peloton had a number of explanations, including the idea that the business is seasonal. The recall affecting seat posts of its Peloton Bike product hit sales as well, and churn figures were higher than initially expected.

Nevertheless, Peloton has only made a bit of progress toward its long-term strategic goals. Free cash flow was barely positive in the quarter and is expected to turn negative once again over the next six months. Despite assertions that cost-cutting is paying off, Peloton is still expecting losses in the current first quarter of fiscal 2024, even after adjusting for interest, taxes, depreciation, and amortization. To bounce back, the treadmill and bike-focused fitness company has to move more aggressively to build up a sustainable customer base, and the path forward is far from clear to achieve that goal. Shareholders have to have a high tolerance for risk to justify a position in Peloton right now.

Foot Locker suspends its dividend on weak results

Shares of Foot Locker got hit equally hard, falling 33% in premarket trading. The athletic footwear and apparel retailer's fiscal second-quarter financial report for the period ended July 29 showed substantial declines in business activity, and the company took steps to preserve capital by planning to suspend cash dividend payments after October 2023.

Foot Locker's results showed the weakness of consumers. Revenue dropped 10% year over year to $1.86 billion on a comparable-store sales decline of 9.4%. Higher levels of promotional activity caused gross margin figures to fall by 4.6 percentage points, and higher costs showed that Foot Locker's efforts to cut costs weren't successful enough to offset financial pressures. The contraction in Foot Locker's business was a natural consequence of strategic moves, which included the closure of 108 stores. Adjusted earnings plunged to $0.04 per share, down from $1.10 in the year-ago period.

Even worse, Foot Locker sees an even more difficult future. For the full fiscal year, the retailer cut its guidance, now projecting revenue to fall 8% to 9% on a 9% to 10% drop in comparable sales. A reduction in earnings guidance of between $0.70 and $0.75 per share produced a new range of $1.30 to $1.50 per share for the year.

Foot Locker will pay its $0.40-per-share dividend in October, but after that, it will pause further payments to boost its balance sheet flexibility. That has considerable implications for how Foot Locker sees its financial condition, and investors have to be disappointed that the company has had to resort to such drastic measures. Foot Locker stock is far from a sure bet right now.