Stock Market Update

[BRIEFING.COM] The major averages remain little changed from previous levels at midday.

On the earnings front, Cooper (COO 54.70, -8.78, -13.84%) is plunging lower after a Q3 revenue miss and sharp downside Q4 guidance exposed a steeper near-term slowdown at CooperVision, while the completed strategic review ended without a sale of CooperSurgical. Q4 guidance calls for adjusted EPS of $1.05-$1.09 versus the $1.19 FactSet consensus and revenue of $1.057-$1.080 billion versus $1.11 billion, outweighing healthy U.S. consumption, record free cash flow, and expanded repurchase capacity.

American Eagle (AEO 14.40, -2.50, -14.77%) is also sharply lower today after reporting its Q2 (Jul) results last night. The company's results paint a mixed picture, with Aerie continuing to carry much of the growth while the larger American Eagle brand remains softer. The tariff refund also makes the headline EPS beat and margin expansion look much stronger, with gross margin contracting year-over-year after excluding the 1,300-bp benefit amid merchandise margin pressure and AE markdowns. There are encouraging signs at AE, including a fourth straight positive comp in men's and improving women's denim, while Q3-to-date comps have improved to roughly flat from -1% in Q2. Aerie, meanwhile, continues to comp in the high-teens to 20% range, though it will lap a much tougher +23% comparison in Q4, making the durability of that strength worth watching. The main drag appears to be the modest trim to back-half operating income expectations, with AE now expected to be roughly flat versus prior low-single-digit growth. This puts greater focus on holiday execution and whether AE can build on its recent sequential improvement as Aerie moves into tougher comparisons. A host of other apparel stocks trade lower in sympathy with American Eagle's post-earnings move.