US Stocks Mixed; FedEx Hurt by Amazon Threat

The major U.S. equity indexes finished mixed on Wednesday, erasing earlier gains into the close as the five session winning streak came to a close. Although the markets were able to inch higher most of the session, gains were limited by weak earnings from shipping giant FedEx. Both the benchmark S&P 500 and technology-based NASDAQ Composite hit intraday all-time highs with the latter the only one of the major three ending higher.

In the cash market, the S&P 500 Index settled at 3191.14, down 1.38 or -0.04%. The blue chip Dow Jones Industrial Average finished at 28239.29, down 27.88 or -0.10% and the NASDAQ Composite closed at 8827.74, up 4.38 or +0.05%.

FedEx Shares Slide after Missing Earnings Expectations, Lowering 2020 Guidance

FedEx shares sank nearly 7% in extended trading Tuesday and the weakness continued on Wednesday after the shipping giant reported weaker-than-expected earnings in the second quarter and lowered its guidance for the rest of the year.

“Our revised guidance reflects lower-than-expected revenue at each of our transportation segments and higher-than-expected expenses driven by continued mix shift to residential delivery services,” CFO Alan Graf Jr. said in a press release.

FedEx attributed the quarterly earnings miss to a number of factors, including weakening global economic conditions and the loss of business from “a large customer,” presumably Amazon.

Amazon Threatens FedEx Stock

Amazon’s foray into its very own delivery capabilities has continued to threaten FedEx stock, as its shipping ties to FedEx weaken. Earlier this week, Amazon said it told its third-party sellers, which make up 58% of its total merchandise sales, that they will temporarily be restricted from using FedEx’s ground and home delivery for Prime orders. The move came after FedEx ended its ground-delivery contract with Amazon in August, and its domestic express shipping contract in June.

FedEx Sees a Turnaround

FedEx’s rocky relationship with Amazon may have contributed to its fiscal second-quarter earnings slump, but the shipping company says it could actually turn a corner and outpace its competitor in fiscal 2021.

“If you think about all the positive things we’ve said and that we’re seeing, as we get into 2021, we will start lapping Amazon,” FedEx CFO Alan B. Graf Jr. said on the company’s earnings call Tuesday evening. “Without giving you specifics, we’re at the bottom, and we’re going to come up off the mat and we’re going to improve through the rest of this year and into the next.”