Why GameStop, Foot Locker, and Michaels Companies Dropped Wednesday

GameStop (NYSE: GME), Foot Locker (NYSE: FL), and The Michaels Companies (NASDAQ: MIK) plunged today with only Foot Locker avoiding a 10% intraday drop, after comments from Federal Reserve Chair Jerome Powell shook the markets.

Retailers, among other hard-hit industries during the COVID-19 economic slowdown, were hoping for a swift rebound in consumer activity as some states slowly reopen parts of the economy. But Powell's comments today made a V-shaped rebound seem unlikely: "The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems," Powell said during his webcast appearance with the Peterson Institute for International Economics. Powell went as far to say that, were COVID-19 impacts to last longer than expected, it could "leave behind lasting damage" to the economy -- essentially the opposite of what most retailers wanted to hear. The gloomy comments, even if realistic, sent markets lower on Wednesday.