What Happened?
Shares of parcel and cargo delivery company FedEx (NYSE: FDX) fell 3.1% in the afternoon session after the company's Supply Chain division announced it will cut 611 jobs in Memphis, Tennessee.
The decision comes as a result of a key client, Cummins, altering its logistics strategy, leading to the workforce reduction at the specific warehouse. This news raises concerns for investors about the potential impact on revenue and operational stability stemming from changes in major client relationships. The job cuts point to a direct loss of business from a significant customer, overshadowing other recent operational developments.
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What Is The Market Telling Us
FedEx’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock gained 3.7% on the news that an in-line inflation report fueled hopes for interest rate cuts and the U.S. and China agreed to extend their tariff truce.
The Consumer Price Index (CPI), a key measure of inflation, came in largely as expected, holding steady at 2.7% year-over-year. This reading boosted investor optimism that the Federal Reserve will have room to lower interest rates at its next meeting, which could reduce borrowing costs for companies and consumers.
Adding to the positive sentiment, the U.S. and China extended their tariff truce for another 90 days. This development alleviates concerns about renewed trade tensions, which is a significant relief for industrial companies reliant on global supply chains and international sales. Together, these events create a favorable outlook for economic growth, benefiting cyclical sectors like industrials.
FedEx is down 18.4% since the beginning of the year, and at $223.79 per share, it is trading 26.7% below its 52-week high of $305.15 from November 2024. Investors who bought $1,000 worth of FedEx’s shares 5 years ago would now be looking at an investment worth $981.92.
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