US Stocks Mixed as Investors Consider FedEx Slump and Federal Reserve Outlook

U.S. stocks exhibited a mixed performance on Friday, as investors assessed a decline in FedEx shares and anticipated further rate cuts from the Federal Reserve following the central bank’s significant reduction earlier in the week.

By 1:02 p.m. ET, the Dow Jones Industrial Average had risen by 71 points, or 0.2%, while the S&P 500 and NASDAQ Composite both edged down by 0.1%.

On Thursday, both the Dow Jones and S&P 500 had closed at record highs, buoyed by optimism surrounding lower interest rates following the Federal Reserve’s initiation of a rate-cutting cycle.

Despite the minor losses on Friday, the three major U.S. indices were on track for weekly gains, with the S&P 500 up nearly 1.6%, the Dow up 1.5%, and the NASDAQ outperforming at a 1.9% increase.

Analysts at UBS noted, "Historically, stocks have performed well during periods when the Fed is cutting rates while the U.S. economy continues to grow. Markets seem to be expecting this positive scenario." They contrasted this with the concerns that arose at the beginning of August, when weak employment data had led to worries that the Fed may have delayed rate cuts for too long.

Fed Officials Re-emerge Following Rate Cut

Federal Reserve officials are expected to return to the public eye following a period of silence, with Philadelphia Fed President Patrick Harker scheduled to speak at 2 p.m.

Earlier this week, the Fed cut rates by 50 basis points and initiated an easing cycle that is anticipated to reduce rates by a total of 125 basis points by the end of the year. However, the Fed’s medium- to long-term outlook appears less accommodating, as Chair Powell indicated that there are no plans for ultra-low rates and that the neutral rate is likely to be much higher than in the past.

FedEx Faces Earnings Challenges, Nike’s Leadership Change, American Airlines Exploring New Partnership

FedEx shares plummeted 13% after reporting quarterly earnings that fell significantly short of expectations. The company faced challenges as customers shifted to cheaper, slower delivery options, and industrial demand also softened unexpectedly. As a prominent indicator of global economic health, FedEx’s weak performance raises concerns about a potential slowdown in economic activity.

Conversely, Nike saw its stock rise by 7% following the announcement that CEO John Donahoe will step down next month. Elliott Hill, a seasoned executive with over three decades at Nike, will take over the role. Analysts at Deutsche Bank believe this leadership change will instill a renewed sense of urgency focused on product innovation, storytelling, marketing, and rebuilding wholesale partnerships, all of which had been areas of struggle under the previous leadership.

Additionally, American Airlines is reportedly in discussions to partner with Citigroup as its new exclusive credit card issuer, moving away from Barclays as its rival card issuer.