By Yasin Ebrahim
Investing.com -- The Dow suffered a heavy weekly loss Friday, as a profit warning from FedEx triggered fresh worries about the global economy ahead of an expected Federal Reserve rate hike next week.
The Dow Jones Industrial Average fell 0.4%, or 139 points, dropping more than 4% for the week. The Nasdaq was down 0.9% and the S&P 500 fell 0.7%.
Industrials led the broader market lower, pressured by a more than 21% plunge in FedEx (NYSE:FDX) after it pulled its guidance as slowing global growth dents shipment volumes.
The profit warning triggered a wave of downgrades on Wall Street, with Goldman Sachs cutting its price target on the stock to $20 from $23, anticipating earnings to weaken in the coming quarters.
Other transport asset-based transports are also expected to face “tough margin-related headwinds and/or elevated EPS risk,” Goldman Sachs adds, as the global economy moves into a deeper potential economic slowdown.
United Parcel Service (NYSE:UPS), XPO Logistics (NYSE:XPO) and GXO Logistics (NYSE:GXO) were sharply lower, with the latter down about 8%.
General Electric (NYSE:GE) was also a big drag on industrials after falling more than 3% as the company flagged ongoing supply-chain issues that are expected to continue to not only hamper product deliveries but also weigh on cash flow.
Energy, meanwhile, moved further into the red for the week, pressured by weaker oil prices as global growth concerns continued to keep worries about fuel demand front and center at a time when the U.S. is expected to release more petroleum from its strategic reserves.
Earlier this week, the International Energy Agency said that about 52 million barrels of additional oil will be supplied from strategic reserves in September and October. “The medium-term risks to the crude oil price therefore continue to point to the downside,” Commerzbank said in a note.
In tech, meanwhile, Adobe Systems Incorporated (NASDAQ:ADBE) slipped 3% after a slew of Wall Street analysts downgraded the stock on concerns that the software company’s deal to acquire Figma could weigh on earnings growth.
The weekly plunge in the broader market comes just ahead of the Fed’s monetary policy decision due next week. The central bank will likely lift interest rates by 0.75% and deliver hawkish guidance on future hikes.
“We expect the FOMC to deliver a third 75bp rate hike at its September meeting, and upwardly revise the median path for policy to a peak rate of 4.1% by end-2023 as it contemplates a longer tightening cycle with higher peak rates,” Morgan Stanley said in a note.