Wall Street stocks fell on Friday, sending US stocks to close a week with significant losses after a profit warning from courier company FedEx raised concerns about the economy.
The S&P 500 index fell 1.1% to open in New York, while the more technology-focused Nasdaq Composite fell 1.4%.
The drop came after shares of FedEx fell 22% ahead of the group’s announcement late Thursday that it would close offices, freeze hiring and park planes to cope with the drop in volume. package shipping.
The US company, considered a solid economy because of its central role in global trade, released preliminary quarterly financial results that missed analysts’ forecasts. It also withdrew guidance for the rest of the fiscal year as it warned of worsening “macroeconomic trends” in the US and abroad.
European stock markets also reflect investors’ jitters about the global economic situation. The regional Stoxx 600 lost 1.3% in afternoon trade, while Germany’s Dax fell 1.7%. In Asia, Hong Kong’s Hang Seng index lost 0.9% and Japan’s Topix fell 0.6%.
The US S&P 500 index fell 4% in the week to Thursday as traders worried that the Federal Reserve could start raising interest rates more aggressively in an attempt to weather the worst inflation in a year. four decades.
Trading in federal funds futures on Friday showed that the market now expects the Fed to raise its key interest rate to 4.5% in March next year, compared with a forecast of around 4% earlier this week.
That would mark a sharp rise from the current 2.25 to 2.5% range and from near zero in early 2022. Higher borrowing costs typically hit economic growth and some economists economists say that central banks may find it difficult to avoid the world’s largest interest rate recession.
Hotter-than-expected August inflation data released on Tuesday, showing a slower-than-expected annual pace of consumer price growth, shocked many economists, who had expected hope that lower gasoline prices will lead to higher inflation. Concern increased further on Thursday as weekly jobless claims data showed the enduring strength of the US labor market.
“August is particularly strong [inflation reading] According to BNP Paribas, dampening hopes of an impending deflation and increasing the risk of high inflation becomes even more difficult.” The Bank of France noted that the data opened the door to a 1 percentage point rate hike when Fed policymakers meet next week, accelerating from two consecutive 0.75 percentage point increases.
In terms of currencies, the dollar rallied against the pound and the euro as traders looked forward to an important week for central bank news. In addition to the Fed, the Bank of England and the Bank of Japan will make monetary policy decisions next week.