What FedEx can (maybe) tell us about the global economy

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Late last Thursday, the global shipping giant withdrew its full-year earnings guidance and announced it would close 90 offices, five corporate locations, defer hiring, reduce flights, and cancel projects. The catalyst? Less packages were shipped later in the quarter, as the world’s economy “significantly worsened.”

The company’s stock fell 21% on Friday, its biggest one-day drop in history (even topping its 16% plunge on Black Monday in 1987). Overall, all three major stock indexes finished the day in the red to top off their worst week since June.

🤔 Why investors think FedEx’s move is a big deal… Transport stocks are typically seen as a leading indicator for the economy. The thought is fairly simple: when things are going well, more people are buying and selling goods, causing more packages to be shipped.

• And when things aren’t going so hot… well, you can fill in the rest.

📸 Big picture: The pandemic boom in online shopping appears to be cooling off, per the WSJ. Consumers are switching more of their spending to travel and entertainment, plus high inflation is causing spending cutbacks, leading to less items being purchased.