U.S. stocks edged lower Wednesday, with Wall Street’s multi-week rally tempered by disappointing full-year guidance from delivery giant FedEx.
By 09:35 ET (14:35 GMT), the Dow Jones Industrial Average was down 80 points, or 0.2%, S&P 500 traded 8 points, or 0.2%, lower and NASDAQ Composite dropped 20 points, or 0.1%.
All three averages are on course for a winning December and 2023 amid growing optimism that the Federal Reserve will authorise interest rate cuts in the new year.
There is now a more than 72% chance that the Fed will roll out a 25 basis point cut in March, up from 43% last week, according to Investing.com’s Fed Rate Monitor Tool.
Goldman Sachs raised its S&P 500 target for 2024 by 8% to 5,100 earlier this week, more than 300 points above Tuesday’s close, forecasting a tailwind for U.S. stocks from falling inflation and declining interest rates.
Weak guidance sees FedEx slump
That said, investors appear to be taking a breather from this lengthy rally as they digest disappointing news from FedEx (NYSE:FDX), widely seen as a bellwether for the U.S. economy as it tends to indicate strength, or weakness, in consumer spending.
The parcel delivery firm stock fell 11% after it slashed its full-year revenue guidance and posted weaker-than-anticipated quarterly profit, warning that customer demand will face headwinds from “volatile macroeconomic conditions” for the rest of its fiscal year, ending on May 31.
The outlook hinted at weakness in typically robust holiday spending activity in the U.S., as consumers continue to cope with high inflation and elevated interest rates.
General Mills (NYSE:GIS) stock fell 3.5% after the food processor cut its annual sales forecast and missed second-quarter estimates, warning of a slower recovery in demand.
Fed’s favored inflation gauge looms large
The economic data slate Wednesday includes consumer confidence data for December and existing home sales for November.
However, most eyes will remain focused on Friday’s core Personal Consumption Expenditures price index, the Fed’s favorite measure of inflation, as investors look for further evidence that inflation has slowed enough for the Fed to begin easing policy next year.
Oil prices rise despite increasing API stockpiles
Oil prices rose Wednesday as traders continued to monitor the unstable geopolitical situation in the Red Sea while digesting an unexpected build in U.S. crude stockpiles.
By 09:35 ET, the U.S. crude futures traded 1.8% higher at $75.26 a barrel, while the Brent contract climbed 1.6% to $80.46 a barrel.
Crude prices rebounded sharply from near five-month lows this week as oil companies and shipping operators announced plans to avoid the Suez Canal as a result of attacks by the Yemen-backed Houthi group on vessels in the Red Sea, potentially disrupting oil supplies to the important Asian market.
This has overshadowed data from the American Petroleum Institute which showed that U.S. crude inventories unexpectedly rose by 900,000 barrels last week, defying expectations for a draw of 2.2 million barrels.
The official reading from the Energy Information Administration is due later in the session, but the API reading points to U.S. production continuing at record-high levels.
Additionally, gold futures fell 0.2% to $2,048.05/oz, while EUR/USD traded 0.2% lower at 1.0962.
https://www.investing.com/news/stock-market-news/us-stock-futures-slip-as-fedex-guidance-disappoints-3260567
