It has not been easy on the market Hecla Mining Company (NYSE:HL) stock in the recent weeks. What is happening to the stock? The culprit is the volatile commodity prices, especially gold, which has been heightened in the recent weeks by the coming Federal Reserve policy meeting.
Adding to the pressure on Hecla Mining Company (NYSE:HL) stock is that some analysts recently downgraded their rating on the stock, still on the basis of the risks in the commodity market.
The Fed is holding its two-day policy meeting between Sept. 20 and Sept. 21. The central bank could raise interest rates or leave them unchanged at the end of the policy meeting. Though the Fed chief Janet Yellen appeared to signal that the central bank was close to hiking interest rate because near-term risk to the economy had diminished, a recent streak of uneven economic data has thrown near-term rate increase into doubt.
A number of Fed officials have also contradicted themselves several times as the head into the meeting, leaving the public with an impression of a divided house at the central bank.
Gold, one of Hecla Mining Company (NYSE:HL)’s products, is sensitive to interest rates such that demand for the yellow metal sinks when rates increase. As such, volatility in the stock has been triggered by the uncertainty stemming from Fed meeting and how it will impact interest rates and gold prices.
Continued weakness in commodity prices also led analysts at BMO Capital Markets at lower downgrade their rating of Hecla stock to Market Perform from Outperform. The analysts have a $7 price estimate on Hecla stock.
How Hecla fared in 2Q
Despite the tough conditions in the commodity market, Hecla Mining Company (NYSE:HL) has tried to delight investors with beating financial results. The company posted EPS of $0.06 in 2Q2016, topping the consensus estimate of $0.05. Revenue of $171.3 million rose 64.4% YoY and outpaced the consensus estimate by $28.05 million.