.FedEx reports shipping slowdown and warns recession looms
FedEx’s stock plummeted by more than 22% after the market opened following news that it expects to fall $500 million short of its revenue target, the biggest drop since at least 1980. The news is an indicator that global demand is slowing, which could portend a recession.The company said it expects first-quarter earnings to clock in at $3.44 per share, far below the average analyst estimate of $5.10.
Transportation and shipping stocks are seen as a bit of a leading indicator of the health of the economy and how the wider stock market will perform, so FedEx’s gloomy outlook is causing investors to panic that a recession could be right at the country’s doorstep. “I think so. But you know, these numbers, they don’t portend very well,” Subramaniam responded. “I’m very disappointed in the results that we just announced here, and you know, the headline really is the macro situation that we’re facing.”
The slowdown in demand is raising fears of a recession as the Federal Reserve continues to jack up rates in an attempt to pump the brakes on the country’s towering inflation, which is now clocking in at 8.3% annually when measured by the consumer price index for August. Following the CPI report, the Dow Jones Industrial Average suffered its seventh biggest decline in points in U.S. history. The tech-heavy Nasdaq composite fell by more than 5%, and the S&P 500 declined by 4.3%.
Bigger and more frequent rate hikes make a recession more likely. Some elements of the economy indicate that a recession is seemingly inevitable.
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