Investors are always afraid of uncertainty, and Thursday's market action showed just how frightened many investors are about what the Federal Reserve is likely to do in the near future. Coming into 2016, Fed watchers expected several interest-rate hikes from the central bank, but the market's downturn early in the year made most people put off their forecasts for an anticipated increase.
Now, however, market participants think there's a good chance that the Fed could move at its June meeting, and major market benchmarks fell sharply as that possibility sank in. However, the market managed to come off its lows later in the day, and several stocks posted substantial increases. Among the biggest gainers were American Eagle Outfitters (AEO 8.66%), Dick's Sporting Goods (DKS 8.40%), and TerraForm Global (NASDAQ: GLBL).
American Eagle Outfitters climbed 18% after the company reported its first-quarter financial results Wednesday afternoon after the market closed. The retailer posted a 6% increase in comparable sales, which was all the more impressive because of all the high-profile retail giants that have suffered substantial declines in their quarterly performance compared to year-ago figures.
American Eagle said that its Aerie brand had blowout comparable-sales gains of 32%, demonstrating the success of the intimate apparel concept. With an almost 40% rise in its bottom line, American Eagle appears to have found a way to navigate the complex teen-apparel segment successfully, and investors are excited about its future prospects.
Dick's Sporting Goods rose 9% in the wake of its first-quarter results Thursday morning. The sporting-goods specialist enjoyed a much-smaller increase in consolidated same-store sales of just 0.5%, but earnings came in at the high-end of the company's previous range of guidance despite falling 10% from year-ago levels. Still, the company cut its full-year earnings guidance by $0.10, to $0.25 per share.
As CEO Edward Stack noted, "The consolidation that is occurring among sporting goods retailers is creating a unique time in the industry," and that means that Dick's believes that the next few quarters could be difficult because of the liquidation sales of rival Sports Authority, and their negative impact on pricing power. Longer term, though, the trend toward a more-active lifestyle among many demographic segments of the population should work in Dick's favor.
Finally, TerraForm Global gained 7%. The rise came despite news Wednesday afternoon that the company had received a notification letter from the Nasdaq Stock Exchange indicating that it only has until May 31 to submit a plan to comply with ongoing listing requirements.
TerraForm Global hasn't yet filed its annual report on Form 10-K, in part because it's trying to figure out what impact the bankruptcy of related entity SunEdison might have on its own financials. With the SunEdison bankruptcy proving to be complicated, TerraForm Global could remain volatile until creditor-related issues get resolved.