Stocks fell on Friday morning, deepening a sell-off in US stock markets that put all three major averages on track for a weekly loss. The moves came as traders weighed a dire warning from FedEx about the global economy.
The S&P 500 fell 1.2% at the start of trading as the Dow Jones Industrial Average lost 350 points, or 1.1%. The tech-heavy Nasdaq Composite led the losses, falling 1.6%.
FedEx (FDX) withdrew its guidance for the full year on Thursday night and sent messages about its earnings outlook that sent shares soaring in extended trading. Shares sank more than 20% at the start of the trading session on Friday.
“Global volumes declined as macroeconomic trends worsened significantly later in the quarter, both internationally and in the US,” FedEx CEO Raj Subramaniam said in an earnings release. “We are quickly addressing these hurdles, but given the speed at which conditions have changed, first quarter results are below our expectations.”
With the third-quarter reporting season under cover, several strategists have soured their earnings expectations and cut their forecasts.
According to data from FactSet Research, S&P 500 earnings growth expectations stand at a 3.7% rise for the third quarter, well below expectations for growth of 9.8% at the end of June.
Analysts have cut third-quarter earnings expectations in the past 2-3 months for every sector in the S&P 500 except energy, with seven of the 11 sectors in the index now expected to show absolute year-over-year declines in earnings. gains, compared to just three in the second quarter.
Morgan Stanley’s chief US equity strategist Michael Wilson, a vocal stock market bear, has said that while the first half of the year was shaped by inflationary pressures and hawkish Fed policy, the rest will be buoyed by slowing growth and weak earnings.
“While we acknowledge stocks’ poor performance so far this year, we don’t think the bear market is over if our earnings forecasts are correct,” Wilson said in a recent note to clients.
In the bond market, the benchmark 10-year US Treasury held above 3.46%, while the policy-sensitive 2-year Treasury soared further to 3. 9%, the highest level since 2007.
Oil prices rose slightly on Friday morning, but the commodity was on track for a third week of declines.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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