FedEx plummeted more than 20% on Friday, and it was the worst day ever for the stock, based on data going back to 1978, according to Dow Jones Market Data. I repeat the worst day for the stock since 1978!
The real reason for the drop is the demand for freight which dropped significantly. It isn`t funny to be a CEO when you know that your company has lost $11 billion in market value, but that`s a fact.
The company will take some essential steps to fix some of the problems. They will cut some costs. Cut worker’s hours. Park some aircraft, and close more than 90 FedEx Office locations.
CEO Raj Subramaniam isn`t optimistic about the economy and claims we will see a recession very soon. But he is not alone in saying so. The chief executive officer of McDonald`s Corp. said earlier this week he expects a minor US recession in 2023 and a more significant one in Europe.
Earnings from FedEx were worse than expected. Earnings came in at $3,44 a share, which is well short of the $5,10 average estimate of analysts. Revenue of $23,2 billion ended in August missed expectations. FedEx is trading at $161,02 on Friday.
What a day in the stock market. Nasdaq plummeted 5,16%. That`s 632,84 points. Dow Jones and S&P 500 were also sharply down, followed by cryptos like Bitcoin. They all went down because the annual inflation rate in the US eased for a second straight month to 8,3% in August of 2022.
This is the lowest number in four months, so why did investors have so much panic? The rate is down from 8,5% in July. But it`s down from 9,1% in June, so, it’s on the way down. For all I know, it will continue the same path, and probably end up in the opposite direction; deflation in the long run.
The energy index increased by 23,8% (32,9% in July). Gasoline increased 25,6% (44% in July). Fuel oil increased 68,8% (75,9% in July).
Natural gas increased 33% vs 30,5%, and electricity was at the highest since August 1981, at 15,8%. Prices for food rose by 11,4%, and that is the most since 1979. The shelter is up 6,2%, which is the most since 1984.
CPI, which excludes volatile energy and food prices, increased 6,3% in a year. This is the most since March, and up markedly from 5,9% in June and July.
The Federal Reserve has done a lot to push down inflation because inflation over time could have dramatic consequences for consumers. The Fed has been hawkish when it comes to interest rate hikes this year.
They try to make it expensive for consumers to borrow, and the interest rate hikes will affect consumers’ interest rates like credit cards, loans, and mortgage rates.
CPI measures changes in the cost of consumer goods and is a key indicator of just how bad inflation is.
Economists anticipated a lower CPI in August, but the index rose 0,1% from the previous month and 8,3 on an annual basis. More rate hikes from the Fed will force consumers to change their lifestyles in the future.
The Fed looks at CPI when deciding whether to raise rates or not. Experts claim that we must expect the Fed to continue to be very aggressive when it comes to rate hikes. So, fasten your seat belts.
So far this year, the central bank has already raised rates by 225 basis points, and many investors are waiting for another 75 basis point rate hike at their meeting next week.
The cost of living is increasing. Higher electricity bills, food, gasoline, and gas prices are making it difficult for many, and it isn`t easy to borrow either. The cost of borrowing is also increasing. On the other side; the rate on your saving account is also increasing.
Experts predict that we could see many more months of rampant inflation.
The Fed funds futures are pricing in a 36% chance that the bank will raise its benchmark rate by a full percentage point. Nomura forecasted a 100 basis point hike in September.
Investors don`t like Fed`s hawkishness, and they are worried that the Fed`s inflation fight will bring in a recession. On the other hand; the Fed is also ramping up the unwinding of its balance sheet to $95 billion per month.
This is a warning. 3810 is a very critical level at the S&P 500, and futures are down more than 2% today. We`re flirting with a support level of around 3,900, but the real panic can set in at around 34,000. What is that supposed to mean? It means that the S&P 500 will go down in a bear market. And that is a sign of stocks that are going down in value.
Since 1928 and the big stock market crash, the S&P 500 has plummeted into a bear market 26 times. A bear market is where the market is down more than 20% or more than that in a two-month period.
Not only that. A bear market can also be part of a recession where the economy has high unemployment and negative GDP output.
The average decline in a bear market was 35,6% since 1928, and the average length of time was 289 days.
Software Powerhouse Microsoft Corp beat Wall Street expectations for quarterly revenue on Tuesday. They have a strong demand for the software giant`s cloud-based services from the pandemic-triggered shift to hybrid work models.
Some companies lost big during the pandemic, but Microsoft profited big from it as individuals and organizations turned to products like Outlook and Teams workplace messaging app. People shifted their behavior as they were working from home during the pandemic.
But it seems like people loved the idea to work from home because after the economies opened up again, people and businesses tend to use a hybrid model of allowing staff to alternatively work from home. And that is strengthening Microsoft`s cloud services, including their flagship cloud offering Azure.
Microsoft reported revenue of $49,36 billion in the third quarter, compared with $41,7 billion a year earlier.
Net income rose to $16,73 billion, or $2,22 per share, in the quarter ended March 31, from $15,46 billion, or $2,03 per share, a year earlier.
«Continued customer commitment to our cloud platform and strong sales execution drove better-than-expected commercial bookings growth of 28% and Microsoft Cloud revenue of $23,4 billion, up 32% YoY,» Chief Financial Officer Amy Hood said in a news release.
For the current quarter, Microsoft expects to generate sales of $52,8 billion, based on the midpoint of its guidance. That matches Wall Street`s target for the June quarter. In the year-earlier period, it posted $46,2 billion in sales.
Microsoft stock fell 3,7% on Tuesday to close at 270,22 amid a broad market sell-off, but in after-hours trading (as I write this article), the stock is up 4,47%. It happened on a day were Nasdaq plummeted 3,7%, while Tesla went down 12,18%. I have been following Microsoft since the 90s, and this is one of the few that survived the dot-com bubble. This company continues to impress.
The times we are living in are far from «normal.» But we cannot blame an invisible virus for all that is happening right now. The question for retailers now is how this holiday season will look like?
Online spending on Black Friday 2021 decreased for the first time ever. According to Adobe Analytics, online shoppers spent a total of $8,9 billion, and that is down a little bit from last year’s $9 billion.
It can be many reasons for the dip, but Adobe believes it can be caused by an uptick in early spending, as some stores started sales and promotions as early as October. Shoppers are also being strategic in their gift shopping, buying much earlier in the season and being flexible about when they shop to make sure they get the best deals.
Black Friday traffic in stores also dropped -28,3% from pre-pandemic levels. Cyber Monday did also have a bad day and dropped for the first time ever. Cyber Monday online sales drop -1,4% from last year to $10,7 billion.
Adobe expects the entire holiday season will see record-breaking e-commerce activity, as shoppers spread out their dollars over more days. Adobe anticipates digital sales from November 1st, to December 31st will hit $207 billion which would represent record gains of 10%.
FedEx forecasts Monday will be one of the highest volume e-commerce days of the 2021 holiday season as it prepares to deliver an estimated 100 million more packages than it did from Black Friday to Christmas in 2019.
According to National Retail Federation, the holiday season will be fine. Spending in November and December could grow as much as 11,5% compared with the same period a year ago. This is much higher than many retail analysts themselves had predicted.
Sales in November and December can hit an all-time high of between $834,4 billion and $859 billion. In other words; we`re on the path for a record holiday season. Omicron can destroy the holiday season, but it can also help.
Instead of taking a trip by plane to other places, consumers will spend their money on Target or Macy`s. That will boost consumer demand, helped by higher wages and inflation. A lockdown will increase online sales and put more pressure on FedEx. People want packages no matter what.