Stocks fell Friday as Wall Street headed toward a big losing week, and traders absorbed an ugly earnings warning from FedEx about the global economy.
The Dow Jones Industrial Average dropped 306 points, or 1%. The S&P 500 and Nasdaq Composite slid 1.2% and 1.6%, respectively.
Shares of FedEx plunged 24% after the shipments company withdrew its full-year guidance and said it will implement cost-cutting initiatives to contend with soft global shipment volumes as the global economy “significantly worsened.”
Transport stocks are typically seen as a leading indicator for the stock market as well as the economy, and FedEx pointed to weakness in Asia as one of the main reasons for its negative outlook. Shares of shipping rivals UPS and XPO Logistics dropped 4% and 7%, respectively, and Amazon’s stock fell 3%.
FedEx’s announcement comes soon after a hotter-than-expected inflation report in the U.S. on Tuesday, which raised concerns that the Federal Reserve will be forced to cause a recession to cool prices. That data sparked a decline of more than 1,200 points for the Dow.
“There is a lot of nervousness about how the global economy can affect the U.S. economy now, while the U.S. economy is dealing with its own set of very serious issues. I think that dynamic is what people have woken up to,” said Callie Cox, US investment analyst at eToro.
The three major averages were on pace to notch their fourth losing week in five as a comeback rally looks increasingly like a bear market bounce. The Dow Jones Industrial Average has declined 4.7% this week, while the S&P 500 is 3.8% lower. The Nasdaq Composite is down 6.2%, headed toward its worst weekly loss since June.
Sarah Min contributed reporting.