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Stock Market News for Sep 19, 2022

·4 min read

U.S. stocks ended lower on Friday to record one of the worst weeks in months as a warning from FedEx about a global economic slowdown amid worries of another steep rate hike by the Fed next week further dented investors’ confidence. All three major indexes ended in the red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) shed 0.5% or 139.4 points to end at 30,822.442 points, after declining 412 points at its trading low.

The S&P 500 fell 0.7% or 28.02 points to close at 3,873.33 points. Energy and industrials were the biggest losers.

The Energy Select Sector SPDR (XLE) and the Industrials Select Sector SPDR (XLI) each lost 2.1%.  The Materials Select Sector SPDR (XLB) lost 1.6%. Nine of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq dropped 0.9% or 103.95 points to finish at 11,448.40 points.

The fear-gauge CBOE Volatility Index (VIX) was up 0.11% to 26.30. Decliners outnumbered advancers on the NYSE by a 3.04-to-1 ratio. On Nasdaq, a 2.24-to-1 ratio favored declining issues. A total of 16.92 billion shares were traded on Friday, higher than the last 20-session average of 10.72 billion.

Worries of Economic Slowdown Escalate

Stocks ended lower on Friday deepening losses for the week as fresh fears of the economy slipping into recession further dented investors’ spirits. The negative sentiment was an outcome of a warning issued by FedEx Corporation FDX late Thursday. The shipment giant withdrew its full-year guidance and annual outlook and said that it will go for aggressive cost-cutting measures as global shipment volumes softened.

FedEx said that it would be a “hard landing” for the U.S. economy as the Fed continues with its steep interest rate-hike policy. The company sighted weakening business in Asia as one of the key reasons for its negative outlook.

Transport and shipment companies are considered leading indicators for both the economy and the stock market. The warning issued by FedEx saw its shares plunging 21.4%. FedEx has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Following this, shares of other transport companies also took a hit. Shares of United Parcel Service, Inc. UPS declined 4.5%, while XPO Logistics, Inc. XPO fell 4.7%.

FedEx’s warning came just two days after the government reported that August inflation figures came in hotter than expected, raising concerns that the Fed will go for another steep rate hike in its next week’s meeting to cool off rising prices.

Several companies lately have trimmed their earnings expectations for the third quarter, indicating that they now fear a global economic slowdown sooner than expected earlier. This has been taking a further toll on markets as investors continue to panic.

Economic Data

In economic data released on Friday, the University of Michigan’s consumer sentiment index jumped to 59.5 in September. This is the index’s highest reading in five months. The rise in September came as people felt relieved after a sharp drop in gasoline prices. Also, they believe that inflation will fall in the long run and prices to rise 2.8% on average year over year for the next five years.

Weekly Roundup

All three indexes suffered their worst weekly declines in months. The Dow ended the week 4.1% lower, recording its worst week Aug 26.

The S&P 500 and Nasdaq declined 4.8% for the week, while the Nasdaq finished 5.5% down for the week. Both the S&P 500 and Nasdaq recorded their worst weekly percentage declines since June.

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