Stock Market Closes Lower After FedEx Issues Warning; All Eyes On Next Week’s Fed Rate Hike
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The stock exchange was closed after Friday FedEx (FDX) warned about its earnings and finances. The tech-heavy Nasdaq Composite led the way down. FedEx’s 21% drop and energy stocks led the decline among the top stocks.
The Nasdaq composite closed down 0.9%. The Dow Jones Industrial Average closed up 0.75, while the S&P 500 fell 0.7%.
The small-cap Russell 2000 index fell 1.5%.
Volume on the Nasdaq and NYSE rose compared to the same time on Thursday, early data showed.
The major indexes continued to drop below support at their 50-day moving averages, while the S&P 500 and Nasdaq traded below their recent lows of Sept. 6, another key support level.
During the week, the S&P 500 fell by 4.8%, the Nasdaq by 5.5% and the Dow by 4.1%.
Stock market to weekly loss
The yield on the 10-year U.S. Treasury note edged higher on the day before settling at 3.46 percent, just below the 11-year high of 3.48 percent set on June 14.
FedEx fell more than 21% after the company warned about its first fiscal year and withdrew its full-year guidance. The shipping company announced cost-cutting measures, including the closure of 90 locations.
“Global volumes declined as macroeconomic performance weakened significantly later in the quarter, both internationally and in the US,” CEO Raj Subramaniam said in a statement. “While this performance is disappointing, we are aggressively accelerating cost-cutting efforts.”
The shipping company’s shares continued to decline below support based on the 50-day and 200-day moving averages.
Economy awaits the expected interest rate cut next week
The University of Michigan sentiment index also showed on Friday that inflation expectations for the next 12 months were the lowest since July 2021.
“As the market prepares for next week’s Federal Open Market Committee (FOMC) meeting, today’s market — a triple Black Friday that is sure to increase market volume and volatility — gets a profit warning from the CEO of FedEx, highlighted by his expectation of an impending global recession,” said Quincy Krosby, LPL Financial’s chief global strategist “The canary in the coal mine may not be dead yet, but he’s probably having trouble breathing.”
Markets have begun to write off a 75 basis point increase as a measure to curb inflation when the Federal Reserve meets next week. Investors now see an 83 percent chance of a 75 basis point hike, compared to a 17 percent chance that the Fed will raise rates by a full percentage point.
The Innovator IBD 50 ETF ( FFTY ), which found resistance at its 50-day moving average this week, beat the stock market again on Friday with a 2.8% loss.
A handful of fertilizer, oil and gas names continued to decline on Friday, including the natural gas play Flex LNG (FLNG), New fortress energy (NFE), Comstock Resources (CRK) and CF Industries (CF).
Energy stores take it to the chin
Among the 11 S&P 500 sectors, energy was among the worst performers. Energy Select Sector SPDR (XLE) lost 2%. Industrial stocks also led the decline.
US crude oil rose 0.2% to around $85.30 a barrel.
On the flip side Bowler ( BOWL ) hit a new high and rose above a buy point, even as the broader market continued to stumble.
Shares are trading within a buy zone from the 1:19 p.m. mark after a strong surge in volume. The relative strength limit has risen sharply in the last week and reached a new peak. According to chart analysis by MarketSmith, Bowlero rose more than 10% last week to all-time highs.
BJ’s Wholesale Club ( BJ ) was one of the few stocks in the IBD 50 to trade higher, gaining 2.6%. Shares are still extended from the recent breakout above the 71.10 double bottom buy point. The stock has recently been floating higher above its 21-day exponential moving average.
Ulta Beauty ( ULTA ) also traded in a 5% buy zone, but remains near the bottom. The stock has risen sideways after breaking out of the 417.08 double bottom mark. Ulta was briefly extended last week, but shares have since retreated in this week’s market selloff.
Follow Michael Molinski on Twitter @IMmolinski
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Tough market week, now comes the Fed; 5 shares standing for now