U.S. stock futures fell Friday as Wall Street headed toward a losing week, and traders absorbed an ugly earnings warning from FedEx.
Dow Jones Industrial Average futures dropped by 273 points, or 0.9%. S&P 500 and Nasdaq 100 futures declined 0.9% and 1%, respectively.
Shares of FedEx plunged 19% 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 “macroeconomic trends significantly worsened.”
The three major averages were on pace to notch their fourth losing week in five. The Dow Jones Industrial Average has declined 3.70% this week, while the S&P 500 is 4.08% lower. The Nasdaq Composite is down 4.62%, headed toward its worst weekly loss since June.
On Thursday, the Dow dropped 173 points, or 0.56%, for its lowest close since July 14. The Nasdaq Composite slid 1.43%, while the S&P 500 fell 1.13%.
Traders are concerned that markets will retest June lows after a surprisingly hot reading in August’s consumer price index report indicated an increasingly difficult pathway to bring down inflation by the Federal Reserve.
“They might have a hard choice to make,” iCapital’s Anastasia Amoroso said Thursday on CNBC’s “Closing Bell: Overtime.”
“Before they were saying, we’re going to try to have a soft landing and bring down inflation. Now they may have to make a choice. It’s either a soft landing or bringing down inflation. In other words, they may have to engineer more of a crackdown on economic growth to bring down inflation,” she added.
On the economic front, traders are expecting the latest consumer sentiment data on 10 a.m. ET Friday.
Analysts bail on FedEx
FedEx’s earnings warning led to several analysts downgrading the stock, including JPMorgan’s Brian Ossenbeck.
“Against a backdrop of weaker economic activity and slower e-commerce growth with inconsistent execution, we believe FDX will continue trading at a depressed multiple until earnings stabilize with some potential help from cost saving initiatives,” Ossenbeck wrote as he downgraded the stock to neutral.
CNBC Pro subscribers can read more here.
— Sam Subin
Sterling falls to fresh 37-year low against dollar
The British pound has dropped below $1.14 for the first time since 1985.
Sterling fell as low as $1.135 at 8:50 a.m. London before rising slightly to $1.137.
The pound has plummeted against the greenback this year on a combination of dollar strength and U.K. recession warnings. Data published Friday morning showed U.K. retail sales fell more than expected in August.
— Jenni Reid
European markets slide 1% as recession, energy fears persist
European markets fell sharply in early trading as recession warnings, expectations for further rate hikes and continued volatility in the energy market weighed on stocks.
The pan-European Stoxx 600 was down 1.2% in the first hour, and U.K., French and German indexes all fell.
All sectors were in the red as energy, industrial and auto stocks dropped more than 2% each.
— Jenni Reid
U.S. 2-year Treasury yield briefly touches 3.9%
CNBC Pro: Top tech investor Paul Meeks picks between Apple and Samsung
Tech stocks suffered yet another sell-off this week as investors digested a hotter-than-expected August inflation report.
Amid a tough year for the sector, some investors are seeking refuge in the relative safety of mega-cap stocks. Top tech investor Paul Meeks weighs in on two such stocks and reveals which he prefers in the current environment.
Pro subscribers can read more here.
— Zavier Ong
China’s retail sales, industrial production for August beat estimates
China’s latest economic data release showed growth accelerated in August.
Retail sales increased 5.4% in August from the same period last year, much higher than July’s 2.7% and also above the Reuters forecast of 3.5%.
Industrial production grew 4.2% last month compared with a year ago, topping the prediction of 3.8% in a Reuters poll. Industrial output came in at 3.8% in July.
Fixed asset investment for January to August this year increased by 5.8%, beating the 5.5% estimate from Reuters.
— Abigail Ng, Evelyn Cheng
Major averages on pace for fourth losing week in five
All three major averages are on track to post their fourth losing week in five. Here are where markets stand through Thursday:
- The Dow Jones Industrial Average is down 3.7%
- The S&P 500 is down 4.08%
- The Nasdaq Composite is down 4.62%, heading toward its worst week since June 17
— Sarah Min
Shares of FedEx tumbled 15.3% in after hours trading after the transport company withdrew its full-year guidance, and said it will implement cost-cutting initiatives to contend with a worsening macro.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations,” FedEx CEO Raj Subramaniam said in a statement.
The company said it is closing 90 office locations, shutting down five corporate office facilities and pausing hiring efforts, as part of those cost-cutting measures.
— Sarah Min
Stock futures open lower
U.S. stock futures opened lower on Thursday night as Wall Street headed toward its fourth losing week in five.
Dow Jones Industrial Average futures dropped by 137 points, or 0.44%. S&P 500 and Nasdaq 100 futures declined 0.51% and 0.60%, respectively.
— Sarah Min