Stocks fell on Friday as Wall Street headed for a week of heavy losses and traders absorbed an ugly FedEx earnings warning about the global economy.
The Dow Jones Industrial Average fell 325 points, or 1%. The S&P 500 and Nasdaq Composite fell 1.3% and 1.7%, respectively.
FedEx shares fell 24% after the shipping company withdrew its full-year guidance and said it will implement cost-cutting initiatives to deal with soft global shipping volumes as the global economy “worsened significantly”.
Transportation stocks are typically considered a leading economic indicator, so the FedEx announcement could contribute to broader declines on Friday.
“It’s a starting point, certainly traditionally,” Silvercrest Asset Management’s Robert Teeter told CNBC’s “Worldwide Exchange.” “[But] I think one of the things we’ve seen in this pandemic and post-pandemic economy is that different sectors have different cycles.”
“The news was certainly not positive, and it’s certainly a sign of the importance of margins going forward, which we think is a company-by-company issue,” Teeter added.
All three major averages were on pace for their fourth losing week in five as a rally looks increasingly like a bear market bounce. The Dow Jones Industrial Average is down 4.5% this week, while the S&P 500 is down 3.7%. The Nasdaq Composite is down 6%, heading for its worst weekly loss since June.
Most of the losses came on Tuesday after a surprisingly warm reading in the August consumer price index report, with the Dow shedding 1,200 points in its worst decline in two years.