Stocks tumbled Friday morning, deepening a sell-off across U.S. equity markets that placed all three major averages on pace for a weekly loss. The moves came as traders weighed an ominous warning from FedEx about the global economy.
The S&P 500 slid 1.2% at the start of trading as the Dow Jones Industrial Average shed 350 points, or 1.1%. The technology-heavy Nasdaq Composite led losses, plunging 1.6%.
FedEx (FDX) withdrew its full-year guidance late Thursday and delivered messaging around its earnings outlook that sent the stock spiraling. Shares tanked more than 20% at the start of Friday's session.
"Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S." FedEx CEO Raj Subramaniam said in an earnings statement. "We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations."
With the third-quarter reporting season on deck, a number of strategists have soured on their earnings expectations and trimmed their forecasts.
According to data from FactSet Research, earnings growth expectations for the S&P 500 stand at an increase of 3.7% for the third quarter, down sharply from expectations of 9.8% growth at the end of June.
Analysts have cut Q3 earnings expectations over the last 2-3 months for every sector in the S&P 500 except energy, and seven out of 11 sectors in the index are now expected to show outright year-over-year declines in earnings, compared to only three in the second quarter.
Morning commuters walk on Wall St. as the Union Jack flies at half staff outside the New York Stock Exchange (NYSE) in New York City, U.S., September 9, 2022. REUTERS/Brendan McDermidMorgan Stanley’s lead U.S. 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 Federal Reserve policy, the remainder will be fueled by slowing growth and weakness in earnings.
“While acknowledging the poor performance in equities year-to-date, we do not 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 U.S. 10-year Treasury note held above 3.46%, while the policy-sensitive 2-year Treasury spiked further, hitting 3.9%, the highest level since 2007.
Oil prices ticked up slightly Friday morning but the commodity was on pace for a third week of declines.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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