FedEx's weak outlook leaves stocks mixed
Stock prices were mixed Tuesday after FedEx sharply reduced its fiscal-year profit forecast. FedEx's stock fell $2.73, or 3.1 percent, to close at $86.55.
Glum economic news from FedEx left stocks mixed on Tuesday.
The Dow Jones industrial average posted a slight gain, but other indexes fell. Declining stocks outnumbered those that advanced. And seven of the 10 industries tracked by the Standard & Poor's 500 index declined.
European stocks fell. So did oil prices.
FedEx said it sees a worldwide economy that has stalled. Investors pay close attention to the company's forecasts because its package delivery business spans the globe and offers a window into how the economy is doing.
FedEx reduced its fiscal-year profit forecast sharply because its customers used its express air delivery service less in favor of slower and cheaper ground service. FedEx's stock fell $2.73, or 3.1 percent, to close at $86.55.
Apple climbed above $700 for the first time, rising $2.13 to close at $701.91. Apple shares have risen more than 19 percent in the past three months. The recent gain has been driven by strong sales of the company's iPhone and related gadgets.
Stocks broadly have been on a strong run. The S&P 500 is up 14 percent since June 1.
"The market is at high levels, certainly due for a pullback, and I suspect we'll probably see one," said Peter Cardillo, chief market economist at Rockwell Global Capital.
The S&P 500 index fell 1.87 points to close at 1,459.32. The Nasdaq closed down 0.87 point at 3,177.80. The Dow rose 11.54 points to 13,564.64.
Markets had rallied sharply last week after the Federal Reserve announced aggressive measures intended to kick-start the economy. This week, investors appear more focused on the weak growth that caused the Fed to act in the first place.
"The feeling on the Street is, 'OK, what can they do next?' and by definition there's nothing more they can do than what they announced," he said. That means investors may feel that they've gotten all of the gains they're going to get after the Fed's announcement, he said.
Ed Hyland, managing director at JP Morgan Private Bank, said it's noteworthy that the market hasn't pulled back more after its recent run-up.
"It will be interesting to see, as we move into earnings season, how the market will react to what we think will be a little bit weaker earnings and macro data," he said.
Also on Tuesday, the Commerce Department reported that the current account deficit, the broadest measure of American trade, dropped 12.1 percent in the second quarter. That's down from a record high in the January-through-March quarter.
The deficit shrank because of an increase in American exports and cheaper oil. But economists are predicting it will grow again because of the global slowdown.
In other corporate news:
— Energizer Holdings Inc. jumped $7.30, or 10.7 percent, to $75.22 after the battery and flashlight maker said it will cut jobs and reduce its overhead.
— Advanced Micro Devices plunged 39 cents, or 9.7 percent, to $3.62 after the world's second-largest maker of microprocessors for personal computers announced unexpectedly that its chief financial officer was leaving.
The price of oil fell $1.33 to $95.29 per barrel on the New York Mercantile Exchange. Oil had hit $100 per barrel in recent days but dropped sharply late Monday as concerns about the lethargic economy persisted.
Stocks fell in Europe, too, after signs that it will take longer than expected to set up a new authority to supervise European banks.
The yield on the 10-year U.S. Treasury note fell to 1.82 percent from 1.84 percent late Monday.