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S&P 500 Slips as FedEx Profit Warning Triggers Fresh Global Growth Worries

Published 09/16/2022, 02:34 PM
Updated 09/16/2022, 02:39 PM
© Reuters.

By Yasin Ebrahim

Investing.com -- The S&P 500 fell Friday, led by a FedEx-induced plunge in industrials after the shipments company’s profit warning triggered fresh worries about the global economy ahead of an expected Federal Reserve rate hike next week.

The S&P 500 fell 1.1%, the Dow Jones Industrial Average fell 0.8%, or 244 points, the Nasdaq was down 1.4%.

Industrials fell more than 2% to lead the broader market lower, pressured by a more than 20% plunge in FedEx (NYSE:FDX) after it pulled its guidance on slowing global growth that will hurt shipment volumes.

The profit warning triggered a wave of downgrades on Wall Street, with Goldman Sachs cutting its price target on the stock to $20 from $23, anticipating earnings to weaken in the coming quarters.

Other transport asset-based transports are also expected to face “tough margin-related headwinds and/or elevated EPS risk,” Goldman Sachs adds, as the global economy moves into a deeper potential economic slowdown.

United Parcel Service (NYSE:UPS), XPO Logistics (NYSE:XPO) and GXO Logistics (NYSE:GXO) were sharply lower, with the latter down about 10%.

General Electric (NYSE:GE) was also a big drag on industrials after falling more than 4%  as the company flagged ongoing supply-chain issues that are expected to continue to not only hamper product deliveries but also weigh on cash flow.

Energy, meanwhile, moved further into the red for the week, pressured by weaker oil prices as global growth concerns continued to keep worries about fuel demand front and center at a time when the U.S. is expected to release more petroleum from its strategic reserves.  

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Earlier this week, the International Energy Agency said that about 52 million barrels of additional oil will be supplied from strategic reserves in September and October. “The medium-term risks to the crude oil price therefore continue to point to the downside,” Commerzbank said in a note.

In tech, meanwhile, Adobe Systems Incorporated (NASDAQ:ADBE) slipped more than 4% after a slew of Wall Street analysts downgraded the stock on concerns that the software company’s deal to acquire Figma could weigh on earnings growth.

The big swing lower in the broader market comes just ahead of the Fed’s monetary policy decision due next week. The central bank will likely lift interest rates by 0.75% and deliver hawkish guidance on future hikes.  

“We expect the FOMC to deliver a third 75bp rate hike at its September meeting, and upwardly revise the median path for policy to a peak rate of 4.1% by end-2023 as it contemplates a longer tightening cycle with higher peak rates,” Morgan Stanley said in a note.

Latest comments

FedEx troubles are long before the start of the recession.. the truth is how can 19 year old kids straight from India with less than 2 months work experience be promoted to be managers in the warehouse.. the truth is nepotism destroyed FedEx.. the managers hire exclusively family and friends, which caused a massive internal theft of stealing customers packages and family and friends gets paid more than "other" workers how can someone with no experience start on level 2 or 3 pay grade and they bring no work ethics and value to the company.. most of them stands around talking, goofing around instead of working on company's time, while "other" workers start on pay grade level 1 they work their butts off for that 80cents raise. that is why FedEx is in massive trouble. until they review and fire those who plays nepotism and conflict of interests... the company will have a hard time to survive
Just watched half of my biotech company holdings randomly skyrocket in the last 5 minutes of the trading day, for absolutely no reason. haha! Hate on Mitchel all you want but it's stuff like this that reminds you how a retail investor is a tiny grain of sand on a beach...and the elites drive the bulldozers. They always get to decide what happens.
Another flagrant display of fraud by the BIGGEST INVESTMENT JOKE IN THE WORLD.  One "late trade" miracle after another, and always during a loss.  What do you think of this laughable, criminally manipulated farce now?  Is the criminal intervention obvious yet, or will heads remain in the sand?
Another round of credible "trading action," as savvy "investors" rush in before the close.  How realistic.  What better a time to buy the most grossly overvalued equities in the world, than late on Friday, after a spate of bad news?  Proves beyond any reasonable doubt just what a predictable, manipulated JOKE this "market" truly is.  The FED continues to perpetrate the FRAUD in broad daylight.  As I said before the open, assume the proper position for the weekend America.
I know some get tired of hearing you complain about this on a nearly basis but it's funny (in a sad way) because what you say is true. It's all run by algorithms. There is very little real trading going on anymore. Whatever the computers (and those that control them) decide for the day, it shall be. Can money be made with that knowledge? Absolutely. But it's still a bit absurd how the market has evolved from humans to machines running the show.
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