FedEx CEO Raj Subramaniam’s ominous warning of a worldwide recession on Friday sent shares of the shipping company to their worst day in decades and sent major Wall Street indices to a two-month low.
FedEx stock fell more than 21% after the company reported a big drop in global shipping volumes and retracted its full-year guidance in a pre-earnings announcement. Friday’s drop was the worst one-day result in the company’s history, dating back to at least 1978. for dow jones market data,
The company, which will report its first-quarter earnings next week, expects adjusted earnings per share to be $3.44 on revenue of $23.2 billion for the quarter. Analysts polled by Refinitiv had expected earnings per share of $5.14 on revenue of $23.59 billion.
The company’s struggles resonated in the broader market after CNBC’s Jim Cramer asked Subramaniam in an interview on Thursday In the evening if he felt the economy was heading for a “worldwide recession”.
“I think so,” Subramaniam said. “These numbers, they don’t portray well.”
“We are a reflection of everyone’s business, especially the high-value economy in the world,” said the FedEx CEO.
FedEx is widely seen as a threat to the overall health of the US economy, with a slowdown in shipments fueling fears of a slowdown in economic activity. US GDP has already declined for two straight quarters – the widely held definition of recession.
“We are seeing volume declines in every segment around the world, and so you know, we just started our second quarter,” Subramaniam said. “Weekly numbers are not looking so good, so we assume at this point that the economic situation is not really good.”
Deutsche Bank analyst quarterly report condemned As the worst miss he has tracked in 20 years.
The Dow fell sharply over 300 points when it opened Friday before closing at 139.40 before passing losses. The decline limited a painful week, in which the Dow fell nearly 1,300 points to 8.3% on Tuesday after the latest inflation print was released. It ended the week at 30,822.40, its lowest since July 14.
All 11 S&P sectors declined, led by a 2.3% decline in the industrial sector. The Dow Jones Transport Average Index dropped 5.1%.
FedEx rivals UPS and XPO Logistics slipped 4.4% and 6.8%, respectively, while Amazon.com Inc slipped 2.9%.
Todd Lowenstein, chief equity strategist at Pvt. Could be worse.” Bank in Union Bank.
“The market is in a tug of sorts for the most part. On the one hand you have these rapidly deteriorating fundamentals, on the other hand this was what I call a false expectation for a revival of the Fed pivot. The market is quickly getting into this position. It’s been that the Fed isn’t going to save the day.”
The Fed is widely expected to deliver a third straight 75-basis-point rate hike at its meeting on September 20-21, as recent data has failed to change the expected course of aggressive policy tightening.
FedEx’s profit warning triggered a frenzy in later trading on Thursday that spilled over into Friday’s trading. the company ticker was Most viewed on Yahoo Finance’s platform As investors tracked down the carnage.
“Global volumes declined as macroeconomic trends worsened significantly later in the quarter, both internationally and in the US,” Subramaniam said in a company release. “We are addressing these headwinds swiftly, but given the speed at which conditions have changed, first quarter results fell short of our expectations.”
FedEx unveiled plans for a range of cost-cutting measures, including closing 90 office locations, reducing flight volume and a hiring slowdown.
Major US stock indexes all ended lower as investors digested the FedEx CEO’s warning. The Dow Jones Industrial Average experienced its worst weekly loss since 2020, following a larger-than-expected August inflation data drop earlier this week.