Stock Rally Stalls As FedEx Reports Soft Earnings And Guidance

Following several straight days of gains, including a nine-day winning streak for the S&P 500, the recent advance by US equity markets appears to be pausing with index futures down 0.2% to 0.3%.  European market action is mixed with London up 0.6%, Frankfurt and Paris flat, and Milan down 0.2%. In Asia Pacific trading, Tokyo climbed 1.4%, while Shanghai fell 1.0%.

Currency and commodity trading is also mixed today. Crude Oil (which has climbed 4 of the last 5 trading days) is up 0.8% this morning. Natural Gas and Copper are flat. Even though US treasury yields are steady, the US Dollar appears to be bouncing a bit with the Pound down 0.7%, the Euro down 0.3%, Gold down 0.2%, and the Loonie steady. Cryptocurrencies are climbing again with Bitcoin up another 2.4%. 

FedEx is down 11.0% in premarket action today after reminding investors that if we do get aggressive interest rate cuts in 2024, it may more likely be due to a slowing economy and a weakening environment for corporate earnings than declaring victory over inflation. The company’s latest quarterly report fell short of street expectations on earnings per share ($3.99 vs street $4.18) and sales. Management also revised downward its sales guidance for the fiscal year ending in May to a decline of 1-9% from its previous estimate of flat sales, blaming a volatile and uncertain global business environment.

Growth in UK Consumer Prices (3.9% vs street 4.4% and previous 4.6%) slowed more than expected, explaining the underperformance of the Pound and outperformance of the FTSE today. Today’s most notable economic numbers are US Existing Home Sales at 10:00 am EST, US DOE weekly Oil inventories at 10:30 am and Bank of Canada minutes at 1:30 pm. Tomorrow morning brings Canada retail sales, and a US Q3 GDP update.

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