The Dow closed down 140 points, or 0.5%, lower. The S&P 500 fell 0.7% and the Nasdaq Composite was down 0.9%.
All three major indexes logged their fourth losing week out of the last five. The Dow dropped 4.1% for the week, and the S&P 500 and Nasdaq dropped 5% and 5.5%, respectively.
During an interview Thursday on CNBC, FedEx CEO Raj Subramaniam was asked if he believes the slowdown in his business is a sign of the start of a global recession.
“I think so,” he responded. “These numbers, they don’t portend very well.”
Transport stocks are thought of as a leading indicator for the market at large, and FedEx in particular is seen as a market bellwether. The announcement could contribute to broader declines in a market that’s already heading for a big losing week.
“Amazon has piled money into its logistics capability over the past few years, to the point it has excess capacity for its own needs and is hungry for more share which is being targeted through FBA (Fulfillment By Amazon) and could be weighing on FedEx.”
Amazon stock was down more than 2% on Friday.
Either way, the third-quarter reporting season begins next month and FedEx’s warning adds to the souring outlook of analysts on earnings expectations.
The FedEx announcement also comes as investors worry about a weakening economic outlook as the Federal Reserve hikes interest rates aggressively to bring inflation under control.
That’s bad news for investors as expectations can be a self-fulfilling prophecy: If consumers anticipate that prices will remain high, they’ll likely spend more and demand higher wages while businesses might raise prices to accommodate higher demand and wages. If expectations are lower, they might rein in spending and ask for smaller wages increases.
Friday’s consumer sentiment report is the last major piece of economic data before the Federal Reserve meets next week to discuss monetary policy and determine whether it will raise rates once again in its battle to tame inflation.
Still, the largest part of this week’s market loss came on Tuesday after a key inflation reading, August’s consumer price index report, came in hot. The Dow lost 1,200 points on the news– it’s worst decline since June 2020.