Written by Yassin Ibrahim
Investing.com – The Standard & Poor’s 500 Index fell on Friday, pushed down by FedEx in industries after the shipping company’s earnings warning raised fresh concerns about the global economy ahead of an expected Fed rate hike next week.
It fell 1.1 percent, 0.8 percent, or 244 points, and it fell 1.4 percent.
Industrial sectors fell more than 2% to lead the broader market lower, pressured by a more than 20% drop in FedEx (NYSE:) after it withdrew its guidance on slowing global growth that will hurt shipment volumes.
The earnings warning sparked a flurry of cuts on Wall Street, as Goldman Sachs cut its target price for the stock to $20 from $23, expecting earnings to weaken in the coming quarters.
Other transportation asset-based modes of transportation are also expected to experience “margin-related headwinds and/or elevated EPS risks,” Goldman Sachs adds, as the global economy transitions into a potentially deeper economic slowdown.
United Parcel Service (NYSE :), XPO Logistics (NYSE 🙂 and GXO Logistics (NYSE:) It was sharply lower, with the latter down about 10%.
General Electric (NYSE:) was also a huge drag on industries after declining more than 4% as the company cited persistent supply chain issues that are expected to continue to not only hamper product delivery but also impact cash flow.
Meanwhile, energy moved further into the red this week, weighed down by weak oil prices as global growth concerns continued to keep fuel demand concerns front and center at a time when the United States is expected to release more oil from its strategic reserves.
Earlier this week, the International Energy Agency said about 52 million barrels of additional oil will be available from the strategic reserves in September and October. “Medium-term risks to price therefore remain to the downside,” Commerzbank said in a note.
Meanwhile, in technology, Adobe Systems Incorporated (NASDAQ 🙂 slumped more than 4% after a number of Wall Street analysts downgraded the stock on concerns that the software company’s deal to acquire Figma could impact earnings growth.
The big swing down in the broader market comes ahead of the Federal Reserve’s monetary policy decision due next week. The central bank will rate 0.75% and provide hawkish guidance on future hikes.
“We expect the FOMC to deliver a third rate hike of 75 basis points at its September meeting, and to review the median path for policy upwards to the 4.1% peak rate by the end of 2023 as it considers a longer tightening cycle with higher peak rates,” Morgan said. Stanley said in a note.