US stocks lower on sharp FedEx losses; weekly gains likely

U.S. stocks edged lower Friday, weighed by weaker-than-expected earnings from delivery giant FedEx, after hitting record highs in the wake of the Federal Reserve's hefty rate cut. 

At 09:35 ET (13:35 GMT), Dow Jones Industrial Average fell 85 points, or 0.2%, S&P 500 dropped 15 points, or 0.3%, and the NASDAQ Composite slipped 20 points, or 0.1%.

The Dow Jones and the S&P 500 both closed at record highs on Thursday, with buying spurred largely by optimism over lower interest rates in the wake of the Federal Reserve's decision to start a rate-cutting cycle on Wednesday.

Despite Friday's minor losses, the three major averages are on pace for weekly gains, with the S&P 500 up nearly 1.6%, the DJIA up 1.5%, while the Nasdaq has outperformed, with a 1.9% advance.

"Historically, stocks have performed well in periods when the Fed is cutting  rates while the US economy is still growing. Markets now appear to be
expecting this outcome," said analysts at UBS, in a note.

"This marks a turnaround from concerns at the start of August, when weak US job data fueled concerns that the Fed had waited too long before cutting rates." Fed outlook in focus

The Fed cut rates by 50 basis points - the upper end of market expectations - and kicked off an easing cycle that is widely expected to see rates drop by a total of 125 bps by the year-end. 

Still, the Fed’s medium-to-long term outlook for rates appeared less dovish. Chair Powell said the central bank had no intention of enacting ultra-low rates, and that its neutral rate was likely to be much higher than seen in the past.  Fedex slides on weak earnings

Delivery and logistics giant FedEx (NYSE:FDX ) stock slid 13% after logging substantially weaker-than-expected quarterly earnings.

The company was hit by customers shifting to cheaper, slower options, while industrial demand was also softer than expected.

FedEx is considered as a bellwether for the global economy, given its heavy exposure to trade. Its weak quarterly earnings also raise questions over a potential slowdown in activity.

On the flip side, Nike (NYSE:NKE ) stock rose over 7% after the athletic apparel firm announced that Chief Executive John Donahoe will set to step down from the position next month.

Donahoe will be replaced by Elliott Hill, who previously spent more than three decades at Nike in various senior leadership roles. Crude on track for weekly gains

Crude prices slipped lower Friday, but were on track for a second consecutive higher week after the large cut in US interest rates helped quell some fears of slowing demand.

By 09:35 ET, the Brent contract dropped 0.7% to $74.33 per barrel, while U.S. crude futures (WTI) traded 0.8% lower at $70.61 a barrel.

The benchmarks have been recovering after they fell to near three year-lows on Sept. 10, and have registered gains in five of the seven sessions since then, including gains of around 4% this week.

(Ambar Warrick contributed to this article.)  

Source: Investing.com