Market closes lower after FedEx warning; All eyes on next week’s rate hike

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Stocks closed lower on Friday FedEx (FDX) warned about its earnings and the economy. The tech-heavy Nasdaq composite led the way. FedEx’s 21% decline and energy stocks led the decline in major stocks.




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The Nasdaq composite closed 0.9% lower. The Dow Jones Industrial Average closed 0.75 lower, while the S&P 500 fell 0.7%.

The small-cap Russell 2000 index fell 1.5%.

Volume rose on the Nasdaq and the NYSE from the same time on Thursday, early data showed.

Major indices continued to fall below support on their 50-day moving average, while the S&P 500 and Nasdaq undercut their recent September 6 lows, another key level of support.

This week, the S&P 500 closed 4.8%, the Nasdaq 5.5% and the Dow 4.1%.

Stock market on track for weekly loss

The yield on US 10-year Treasuries fluctuated over the day before closing at 3.46%, just outside the 11-year high of 3.48% recorded on June 14.

FedEx plunged more than 21% after the company issued warnings for its fiscal first quarter and retracted its full-year outlook. The shipping giant announced cost-cutting measures, including the closure of 90 office locations.

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“Global volumes declined as macroeconomic trends deteriorated significantly later in the quarter, both internationally and in the US,” CEO Raj Subramaniam said in a press release. “While this performance is disappointing, we are aggressively accelerating efforts to cut costs.”

The company’s shares continued to weaken below the support of the 50- and 200-day moving averages.

Economy supports expected rate cut next week

Also on Friday, the University of Michigan sentiment index showed that inflation expectations for the next 12 months were the lowest since July 2021.

As the market braces for next week’s Federal Open Market Committee (FOMC) meeting, today’s market – a triple witch Friday that is sure to increase market volume and volatility – is ravaged by a profit warning from FedEx CEO, underscored by his expectations for an impending global recession,” said Quincy Krosby, Chief Global Strategist for LPL Financial. “The canary in the coal mine may not be dead yet, but it’s probably struggling to breathe.”

Markets have begun to write off a 75 basis point increase as an inflation-fighting measure when the Federal Reserve meets next week. Investors now see an 83% chance of a 75 basis point increase versus a 17% chance that the Fed will raise interest rates by a full percentage point.

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The Innovator IBD 50 ETF (FFTY), which found resistance this week at its 50-day moving average, again underperformed the stock market on Friday with a 2.8% loss.

A handful of fertilizer, oil and gas names continued to lead the downtrend Friday, including natural gas Flex LNG (FLNG), New fortress energy (NFE), Comstock Resources (CRK) and CF Industries (CF).

Energy stores take it on the chin

Of the 11 S&P 500 sectors, energy was one of the worst performers. The Energy Select Sector SPDR (XLE) lost 2%. Industrial stocks also led the downward trend.

The price of crude oil in the US rose 0.2% to about $85.30 a barrel.

On the plus side, bowler (BOWL) hit a new high and broke above a buy point even as the broad market continued to stumble.

Shares are trading within the buy zone from an entry of 13.19 after a strong increase in volume. The relative strength line has risen sharply over the past week and has reached a new high. According to MarketSmith chart analysis, Bowlero climbed more than 10% to record highs in the past week.

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BJ’s Wholesale Club (BJ) was one of the few stocks in the IBD 50 to trade higher, up 2.6%. Shares continue to extend from a recent breakout above a double bottom buy point of 71.10. The stock has recently been floating higher above the 21-day exponential moving average.

Ulta Beauty (ULTA) also traded within a 5% buy zone, but remains on the downside. The stock has trended sideways after breaking out of a 417.08 double bottom entry. Ulta was briefly extended last week, but its shares have since declined during this week’s sell-off.

Follow Michael Molinski on Twitter @IMmolinski

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