Another Awful Risk-Off Week

The bad news for the stock market this past week actually started on September 16 in the morning after FedEx delivered a terrible preannouncement about the current quarter.  The package delivery giant said in a statement the night before that it expects Q1 earnings, excluding some items, to be $3.44 per share, or roughly 33% below the average analyst estimate of $5.10. In addition, FedEx withdrew its earnings forecast for 2023, saying macroeconomic trends have “significantly worsened,” both internationally and in the US, and are likely to deteriorate further, fueling fears of a broad-based earnings decline.

This past week's selling pressure was intensified by Fed Chair Jerome Powell's presser on Wednesday. He said that the Fed will continue to raise the federal funds rate aggressively into "restrictive" territory until inflation moderates significantly. Investors figure that before that happens, the economy will fall into a recession, which is bad news for earnings. Meanwhile, the dollar soared as a result of the Fed's increasing hawkishness, which is also bad news for earnings.