Sign up now for FREE unlimited access to Reuters.comSign up
FedEx’s warning sends shivers across the industry All three major indexes posted big weekly losses Indexes down: Dow 1.06%, S&P 1.43%, Nasdaq 1.78%
Sept 16 (Reuters) – Wall Street’s main indexes hit near two-month lows on Friday after a profit warning from the global delivery market as FedEx silenced investors already worried about aggressive rate hikes by the Federal Reserve Reserve that drive the economy into recession. The benchmark S&P 500 (.SPX) fell below the 3,900 mark, a level investors see as key support, dragged down by a 23.4% plunge in FedEx Corp shares. The stock was on pace for its worst day on record after the company said a slowdown in global demand accelerated in late August and forecast it would worsen in the November quarter. read more Sign up now for FREE unlimited access to Reuters.comSign up All 11 S&P sectors fell in early trading, led by a 2.5% drop in the industrials sector (.SPLRCI). The Dow Jones Transport Average (.DJT) fell 5.8%. “The FedEx news may say something about the health of the economy and underlying demand. However, this news alone is not a specific factor that will be considered in next week’s policy decision,” said Mark Dowding , chief investment officer. BlueBay Asset Management. “We’ve seen growing concerns about higher yields, and slowing growth and the risk of a recession is weighing on sentiment. So we wouldn’t be surprised to see the stock market revisit its lows,” Dowding said. The S&P 500 is now just 5.8% above its mid-June lows, closing off lows as Wall Street’s summer rally is fueled by fears of sharp U.S. interest rate hikes and worsening earnings growth. The U.S. Federal Reserve is widely expected to deliver its third consecutive 75 basis point rate hike at its meeting next week after recent data failed to change the expected path of aggressive policy tightening. Adding to the gloom, the World Bank predicted the global economy may be headed for recession, while the International Monetary Fund said it expected a slowdown in the third quarter. read more September, which is a seasonally weak period for markets, will also see the Fed increase its balance sheet liquidation to $95 billion a month, a move that some investors fear could increase volatility in markets and weigh on the economy. At 9:49 am ET, the Dow Jones Industrial Average (.DJI) was down 329.09 points, or 1.06%, at 30,632.73, the S&P 500 (.SPX) was down 55.86 points, or 1.43%, at 3,845.49 Nasdaq. The Composite (.IXIC) was down 205.11 points, or 1.78%, at 11,347.24. Meanwhile, the monthly options expiration week, which ends on the third Friday of each month, was marked by more volatility than usual this year as options hedging activity fueled market moves. Goldman Sachs strategists said in a note that $509 billion of individual stock options are due to expire on Friday, 10% higher than last month’s expiration and 30% higher than July. US stocks have declined in 7 of the last 8 weeks of option expirations this year On average, the S&P 500 has fallen 1.8 percent in options-expired weeks, compared with an average weekly gain of 0.09 percent in non-expired weeks, according to a Reuters analysis. The CBOE Volatility Index (.VIX), also known as Wall Street’s fear gauge, hit a two-month high of 28.39. All three indexes are expected to post sharp weekly declines, with the tech-heavy Nasdaq (.IXIC) down 6.3%. Declining issues outnumbered advancing ones by a ratio of 11.38 to 1 on the NYSE and by a ratio of 5.87 to 1 on the Nasdaq. The S&P index did not record a new 52-week high and 49 new lows, while the Nasdaq recorded three new highs and 200 new lows. Sign up now for FREE unlimited access to Reuters.comSign up Reporting by Shreyashi Sanyal, Devik Jain, Medha Singh and Ankika Biswas in Bengaluru and Saqib Ahmed in New York. Edited by Shounak Dasgupta and Sriraj Kalluvila Our Standards: The Thomson Reuters Trust Principles.
