Skip to main contentSkip to main content
You have permission to edit this article.
Edit
AP

Wall Street falls as FedEx warning adds to market woes

  • Updated
  • 0

Wall Street closed out the stock market's worst week in three months with more losses Friday, as a stark warning from FedEx about rapidly worsening trends in the economy rattled already anxious investors.

The S&P 500 fell 0.7%, with all but two of its 11 company sectors ending in the red. The benchmark index sank 4.8% for the week, with much of the loss coming from a 4.3% rout on Tuesday following a surprisingly hot report on inflation. The last time it posted a bigger weekly decline was the week ended June 17.

The Dow Jones Industrial Average fell 0.5% and the Nasdaq composite dropped 0.9%. The Russell 2000 index of smaller companies took the heaviest losses, falling 1.5%.

All the major indexes have now posted losses four out of the past five weeks.

FedEx sank 21.4% for its biggest single-day sell-off on record after warning investors that profits for its fiscal first-quarter will likely fall short of forecasts because of a dropoff in business. The package delivery service is also shuttering storefronts and corporate offices and expects business conditions to further weaken.

Industrial giant General Electric also helped put traders in a selling mood after its chief financial officer said the company is still bogged down by supply chain problems that were raising costs. GE shares fell 3.7%.

The worrisome corporate updates hit a market already on edge because of stubbornly high inflation as well as the higher interest rates being used to fight it, which will slow the economy. Wall Street is bracing for another hefty interest rate hike from the Federal Reserve next week following a meeting of central bank policymakers.

“Based on this week’s market results there’s no question that investors are going into the weekend, No. 1 very concerned about the U.S. economy looking into the balance of this year and No. 2, with all eyes focused on next week’s Fed action,” said Greg Bassuk, CEO at AXS Investments.

The S&P 500 fell 28.02 points to 3,873.33. It's now down 18.7% so far this year.

The Dow dropped 139.40 points to 30,822.42 and the Nasdaq slid 103.95 points to 11,448.40. The Russell 2000 gave up 27.04 points to 1,798.19.

Technology stocks, banks and energy firms had some of the biggest losses. Adobe fell 3.1%, Bank of America dropped 1.1% and Chevron slid 2.6%.

Makers of household goods, which are typically considered less risky investments, held up better than the rest of the market. Campbell Soup rose 1.3%.

The Federal Reserve is aggressively raising interest rates in an effort to cool the hottest inflation in four decades, but that has raised worries that it could hit the brakes too hard and slide the economy into a recession. The central bank has already raised interest rates four times this year and economists expect another jumbo increase of three-quarters of a point when the Fed's leaders meet next week.

Higher interest rates tend to weigh on stocks, especially the pricier technology sector. Technology stocks within the S&P 500 are down more than 26% for the year and communications companies have shed more than 34%. They are the worst performing sectors within the benchmark index so far this year.

The housing sector is also hurting as interest rates rise. Average long-term U.S. mortgage rates climbed above 6% this week for the first time since the housing crash of 2008. The higher rates could make an already tight housing market even more expensive for homebuyers.

Reports this week from the government showed that prices for just about everything but gas are still rising, the job market is still red-hot and consumers continue to spend, all of which give ammunition to Fed officials who say the economy can tolerate more rate hikes.

“The market is really looking at data in terms of what the Fed is going to do next year and how far they’ll have to go,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute. “I think they'll be in a good spot after September, where they’ll have plenty of flexibility to get where they want to be by the end of the year.”

Treasury yields eased a bit Friday after a report showed expectations for inflation among U.S. households are falling to their lowest levels since last year. That’s a positive for markets because the Fed fears a rise in such expectations would make inflation much tougher to fight. But the survey also showed uncertainty remains very high among households about where inflation is heading.

The yield on the 2-year Treasury, which tends to follow expectations for Fed action, fell to 3.85% from 3.92% shortly before the report’s release. The 10-year yield fell to 3.45% from 3.49%.

Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

0 Comments
0
0
0
0
0

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Most Popular

Doreen Bogdan-Martin of the United States has been elected to head the U.N.’s telecommunications agency. She won a U.S.-Russia face-off for the leadership of a global agency that sets guideposts for radio, internet, satellite and television communications. The result on Thursday ended a race that has been overshadowed by geopolitics in the wake of Russia’s war in Ukraine. Envoys from the 193 member states of the Geneva-based International Telecommunications Union voted 139-25 to select Bogdan-Martin over lone rival Rashid Ismailov of Russia.  When she takes over on Jan. 1, she will be the first woman to serve as ITU secretary-general and the first American to hold the post since the 1960s.

Civil rights lawyers and Democratic senators are pushing for legislation that would limit U.S. law enforcement agencies’ ability to buy cellphone tracking tools to follow people’s whereabouts, including back years in time, and sometimes without a search warrant. Concerns about police use of the tool known as “Fog Reveal” raised in an investigation by The Associated Press published earlier this month also surfaced in a Federal Trade Commission hearing three weeks ago. Police agencies have been using the platform to search hundreds of billions of records gathered from 250 million mobile devices, and hoover up people’s geolocation data to assemble so-called “patterns of life,” according to thousands of pages of records about the company.

China has been increasingly using civilian ships including hundreds of fishing trawlers to back up its vast territorial claims and project military power. China’s navy is already the world’s largest by ship count and has been rapidly building new warships. It launched its first domestically designed and built aircraft carrier in June and at least five new destroyers are on the way soon. Experts say civilian vessels such as fishing boats that are anchored for months at a time in the disputed South China Sea do more than just augment the raw numbers of ships. They perform tasks that would be difficult for the military to carry out such as slowly displacing other vessels without involving armed conflict and complicating the rules of engagement.

A former graduate student has been convicted of spying for the Chinese government. A federal jury in Chicago convicted 31-year-old Ji Chaoqun on Monday. He was accused of gathering information on scientists and engineers in the U.S. who had knowledge about aerospace technology and other technologies. The Chicago Tribune reports that jurors acquitted the Chinese national of two wire fraud counts alleging he lied to the U.S. Army when he applied to become a reservist in 2016. A sentencing date was not immediately set. Ji could face as many as 10 years in prison for his conviction for acting as an unregistered Chinese agent.

A prototype, all-electric airplane took its first flight Tuesday morning in central Washington state. The Seattle Times reports that if the Federal Aviation Administration eventually certifies the small airplane to carry passengers, it could become the first all-electric commercial airplane. The plane, built by startup Eviation, was built to carry nine passengers and up two pilots. It took off from Moses Lake, Washington, at 7:10 a.m. Tuesday, and landed eight minutes later. The company’s goal is to show such electric planes are viable as commuter aircraft flying at an altitude of about 15,000 feet. The plane, designed by engineers in Washington state and Israel, is powered by 21,500 small Tesla-style battery cells.

Shares in luxury automaker Porsche have risen on their first day of public trading. The maker of the 911 sports car made its market debut Thursday on the Frankfurt stock exchange. Parent company Volkswagen carried out an initial public offering that is one of the largest in European history. Volkswagen reaped more than 9 billion euros for selling the shares to investors. It's money that the German automaker will need to invest in new technology and software as the global auto industry shifts to electric cars. The IPO is a venture into turbulent markets, as the war in Ukraine, inflation, rising interest rates and an energy crunch have raised fears of recession in major economies.

Apple Inc. has announced it will make its iPhone 14 in India. Manufacturers have been shifting production from China amid geopolitical tensions and pandemic restrictions that have disrupted supply chains for many industries. Apple unveiled its newest line-up of iPhones earlier this month. They will have improved cameras, faster processors and longer lasting batteries at the same prices as last year’s models. The announcement from the Cupertino, California-based company dovetails with Prime Minister Narendra Modi’s push for local manufacturing. India is the world’s second-largest smartphone market after China but iPhone sales have struggled to capture a large share of the market due to their high price tags.

As TikTok's popularity has exploded, it's become more than just a place for viral dance challenges. Young voters are increasingly using the app to learn about politics, elections and issues. And candidates are taking notice. But while politicians from both parties promote the app as a powerful way to reach young voters, some elected officials urge caution. They say concerns about TikTok's parent company, its ties to China's government and its handling of user data should make anyone think carefully before signing up for the platform. That's not denting its popularity though. TikTok continues to be one of the most downloaded and used sites on the internet.

Russian President Vladimir Putin has accused the West of sabotaging the Russia-built gas pipelines under the Baltic Sea to Germany. Putin claimed that the West had turned from sanctions against Russia to “terror attacks,” sabotaging the Nord Stream 1 and 2 pipelines. The White House said Putin's comments were outlandish and just an attempt to distract the world from his annexation on Friday of four parts of Ukraine. President Joe Biden said of Putin: “What he's saying we know is not true.” The comments came ahead of an emergency meeting Friday at the U.N. Security Council in New York. Denmark and Sweden said the blasts, which set off huge methane leaks, probably were due to several hundred pounds of explosives.

All 50 states have received final approval to begin construction on a first nationwide network of electric vehicle charging stations that places one roughly every 50 miles along interstate highways. It's part of the Biden administration’s plan to spur widespread adoption of zero-emission cars. The Transportation Department approved plans Tuesday for the last set of 17 states that will install or upgrade fast chargers along 75,000 miles of highway, coast to coast. By year’s end, drivers could start seeing shiny upgrades to existing highway EV stations in states including California, Colorado, Florida and Pennsylvania.

Listen now and subscribe: Apple Podcasts | Google Podcasts | Spotify | RSS Feed | Omny Studio

Get up-to-the-minute news sent straight to your device.

Topics

News Alerts

Breaking News