Wall Street Steady After Record Surge as FedEx Slips, Nike Rises

Wall Street, FedEx, Nike, stock market, Federal Reserve rate cut, S&P 500, Dow Jones, bond yields/ Wall Street saw modest fluctuations on Friday, with the S&P 500 dipping 0.1% after setting records the day before. FedEx shares plunged 14% due to disappointing quarterly results, while Nike surged 7.5% after announcing a new CEO. The Dow and Nasdaq also experienced slight declines, continuing a mixed trading week.

“Wall Street Drifts Near Records Quick Looks”:

• S&P 500 fell 0.1% after hitting a record high on Thursday.
• FedEx shares dropped 14% due to missed earnings expectations and a lowered revenue forecast.
• Nike surged 7.5% after naming Elliott Hill as its new CEO.
• Trump Media shares fell 6% as former President Trump can now sell his stake.
• Lennar dropped 4.2% despite posting stronger-than-expected profits.
• The Federal Reserve cut interest rates earlier this week, its first cut in over four years.

Wall Street Steady After Record Surge as FedEx Slips, Nike Rises

Deep Look:

On Friday, Wall Street’s momentum slowed following the previous day’s rally, with major U.S. stock indexes posting modest declines in early trading. The S&P 500 dipped 0.1%, while the Dow Jones Industrial Average fell by 66 points, or 0.2%. Despite these minor losses, both indexes remain on track for another winning week, underscoring the market’s ongoing resilience.

The Nasdaq composite was virtually flat as of 9:35 a.m. Eastern time. This comes on the heels of Thursday’s worldwide rally, which saw the S&P 500 and Dow hit new all-time highs.

FedEx Slumps After Disappointing Earnings

One of the biggest drags on the market Friday was FedEx, whose stock plummeted 14% following the release of its quarterly earnings report. The company’s profit and revenue fell short of analysts’ expectations, with fewer packages being sent through its priority services in the U.S. Additionally, FedEx cited rising costs, including higher wages, as factors contributing to its disappointing performance. In response, the company cut its forecast for revenue growth for the remainder of its fiscal year.

Nike Leaps on New CEO Announcement

On the other side of the spectrum, Nike surged 7.5% after announcing that Elliott Hill, a veteran of the company, would be stepping in as its new chief executive. Hill, who had retired from Nike in 2020 after more than 30 years of service, is set to replace outgoing CEO John Donahoe. Investors responded positively to the news, which provided a significant lift to Nike’s stock and helped counterbalance some of the losses from FedEx.

Trump Media Drops Again as Shareholder Lock-Up Ends

Another notable mover was Trump Media and Technology Group, which saw its shares fall 6%. The drop followed the expiration of a “lock-up agreement” that had previously prevented insiders, including former President Donald Trump, from selling their shares. Trump, who owns more than half of the $3 billion company behind the Truth Social platform, now has the option to sell his shares, though he has indicated that he’s in no rush to do so. The stock’s volatility has been a hallmark, with frequent swings of 5% or more in recent months.

Lennar Dips on Mixed Earnings Report

Homebuilder Lennar also saw its shares fall by 4.2% despite posting stronger-than-expected earnings for the latest quarter. While Lennar’s profit topped analysts’ estimates, the company reported that its profit margins on home sales had narrowed. This led to concerns that the margin may remain flat in the current quarter, weighing down the stock.

The Federal Reserve’s recent decision to cut interest rates could offer some relief to homebuilders like Lennar in the coming months. The central bank’s move, which marked its first rate cut in more than four years, is expected to lower borrowing costs and potentially make mortgages more affordable for homebuyers.

Federal Reserve’s Rate Cut and Market Outlook

Earlier this week, the Fed’s decision to reduce its main interest rate closed a chapter of aggressive monetary tightening. Over the past two years, the Fed had been steadily raising rates in an effort to cool off the economy and tame inflation, which had reached multi-decade highs. With inflation now more subdued, Federal Reserve Chair Jerome Powell suggested that the central bank could shift its focus toward supporting the labor market and preventing a potential recession.

However, critics argue that the Fed may have waited too long to cut rates, allowing the higher borrowing costs to weigh on economic activity. There are also concerns that U.S. stock markets are becoming overheated, with some analysts warning of a possible sharp correction. Barry Bannister, chief equity strategist at Stifel, noted that stock prices have climbed faster than corporate profits, a historical indicator of a looming downturn. Bannister predicts a significant drop in the S&P 500 before year’s end, as slowing hiring and other economic pressures raise recession risks.

Global Markets and Economic Data

No major U.S. economic releases were scheduled for Friday, but next week will bring a slew of important reports, including preliminary data on U.S. business activity, updated figures on consumer spending, and a revised estimate of economic growth during the summer.

In the bond market, the yield on the 10-year Treasury rose to 3.75%, up from 3.72% the previous day. Meanwhile, international markets saw mixed results. European indexes fell following Thursday’s gains, while Asian markets fared better. Tokyo’s Nikkei 225 rose 1.5% after the Bank of Japan kept interest rates unchanged, as expected. In China, the central bank also held key lending rates steady, contributing to a 1.4% rise in Hong Kong’s stock market and a slight gain in Shanghai.

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