Stocks fell after FedEx warned of a global recession

Date:

Share post:

[ad_1]


new york
CNN Business

US stocks fell on Friday After FedEx gave investors a grim pre-earnings announcement about the state of the global economy.

The Dow closed down 140 points, or 0.5%. The S&P 500 fell 0.7% and the Nasdaq Composite dropped 0.9%.

All three major indexes entered their fourth straight week of losses. The Dow is down 4.1% for the week, and the S&P 500 and Nasdaq are down 5% and 5.5%.

Shares of FedEx ( FDX ) fell nearly 22% late Thursday after the company cut its full-year guidance and warned that a slowing economy would cause it to fall $500 million short of its revenue target. The weakening global economy, particularly in Asia and Europe, has hurt FedEx’s ( FDX ) ( FDX ) express delivery business. The company said demand for packages weakened significantly in the final weeks of the quarter.

In an interview on CNBC on Thursday, FedEx CEO Raj Subramaniam said he believes the slowdown in business signals the beginning of a global recession.

“I think so,” he replied. “These numbers don’t translate well.”

This marks the worst one-day decline in history – the stock market’s one-day drop of more than 16% in 1987. The Dow Jones Industrial Average fell more than 5% in Friday trading and FedEx competitor UPS ( UPS ) also fell 5%.

Transportation stocks are considered a leading indicator for the market, and FedEx in particular is seen as a market bellwether. The announcement could contribute to a broader decline in the market, which is already heading for a week of big losses.

Still, some analysts think Amazon (AMZN) may be to blame for FedEx’s headaches. Amazon (AMZN) [recently] It offered free shipping software and discounts to sellers,” JPMorgan’s Jack Atherton wrote in a client note.

“Amazon has cashed in on its logistics capabilities over the past few years, and it’s hungry for a lot of share that has excess capacity for its needs and is being targeted through FBA[Fulfillment by Amazon]and weighing on FedEx.”

Amazon stock fell more than 2% on Friday.

Either way, third-quarter reporting season begins next month and FedEx’s warning adds to analysts’ bleak outlook on earnings prospects.

According to FactSet data, third-quarter earnings-per-share estimates have slipped more than 5.5% since the end of June. This is the biggest decline for a quarter since the second quarter of 2020 (when Covid-19 sent the United States into recession).

FedEx’s announcement comes as investors worry about a weak economic outlook as the Federal Reserve raises interest rates sharply to control inflation.

A preliminary reading of the University of Michigan’s consumer sentiment index for September added to the woes for investors on Friday, coming in at 59.5, the highest level since April but below economists’ expectations. According to the September survey, respondents do not expect prices to drop significantly in the short term, while consumers expect inflation to reach 4.6% in the next 12 months and 2.8% in the next five years.

This is bad news for investors because expectations can be a self-fulfilling prophecy: if consumers expect prices to be higher, they may spend more and demand higher wages, but businesses may raise prices to accommodate higher demand and wages. If expectations are low, they may control their costs and ask for a small wage increase.

Friday’s consumer sentiment report was the last major economic data before the Federal Reserve meets next week to discuss monetary policy and decide whether to raise rates again in a battle to tame inflation.

Still, the biggest part of this week’s market losses was the consumer price index report for August, fresh from Tuesday’s headline inflation. The Dow lost 1,200 points on the news – its worst decline since June 2020.

[ad_2]

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

spot_img

Related articles

Imroz Salam Lokhande A Rising Star in Modeling and Acting

Imroz Salam Lokhande: A Rising Star in Modeling and Acting Name: Imroz Salam Lokhande Nickname: Roz Profession: Actor, Model Height: 5.5 inches Weight: 51 kg (112.43 lbs) Figure Measurements: 36/30/36 Eye...

Ragini Kasturi A Versatile Force in Indian Music 28345

Ragini Kasturi: A Versatile Force in Indian Music In the dynamic landscape of Indian music, few artists can make...

Divya Tyagi Makes Her Playback Singing Debut in “A Morning In Kashmir -8426

Divya Tyagi Makes Her Playback Singing Debut in "A Morning In Kashmir Renowned for her soulful devotional songs and...

New Soundboard Review: Pricing is Not Always the Only Criteria

I actually first read this as alkalizing meaning effecting pH level, and I was like, OK I guess...