Stocks fell Friday as Wall Street headed toward a big losing week, and traders absorbed an ugly earnings warning from FedEx about the global economy.
The Dow Jones Industrial Average dropped 335 points, or 1.1%. The S&P 500 and Nasdaq Composite slid 1.2% and 1.4%, respectively.
Shares of FedEx plunged 24% after the shipments company withdrew its full-year guidance and said it will implement cost-cutting initiatives to contend with soft global shipment volumes as the global economy “significantly worsened.”
Transport stocks are typically seen as a leading economic indicator, so FedEx’s announcement could contribute to broader declines on Friday.
“It very much is a bellwether, certainly traditionally,” Robert Teeter of Silvercrest Asset Management said on 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 are having different cycles.”
“No doubt the news was not positive, and it certainly is a tell on the importance of margins going forward, which we think is a company by company issue,” Teeter added.
The three major averages were on pace to notch their fourth losing week in five as a comeback rally looks increasingly like a bear market bounce. The Dow Jones Industrial Average has declined 4.9% this week, while the S&P 500 is 5.3% lower. The Nasdaq Composite is down 6.1%, headed toward its worst weekly loss since June.
The bulk of the losses came on Tuesday following a surprisingly hot reading in August’s consumer price index report, with the Dow losing 1,200 points in its worst decline in two years.