Dec 19, 2023, 4:31 am EST
Stock futures traded flat Tuesday, a day after the S&P 500 finished up 0.5% and moved closer to its all-time. The broad market index stands just 1.2% below its record of 4,796.56 reached in early January 2022.
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UPS employees approved a new five-year union contract with the delivery giant Tuesday, about a month after reaching a tentative deal that averted a strike of 340,000 United Parcel Services workers.
The Teamsters said 86.3% of members voted for the “historic” deal, saying it was “the highest vote for a contract in the history of the Teamsters at UPS.”
UPS,
“Teamsters have set a new standard and raised the bar for pay, benefits and working conditions in the package-delivery industry,” Teamsters General President Sean O’Brien said in a statement. “This is the template for how workers should be paid and protected nationwide, and nonunion companies like Amazon
AMZN,
better pay attention.”
Among the parts of the contract the union highlighted were $2.75-an-hour raises for existing full- and part-time union members this year, and a total of a $7.50-an-hour raise over five years. All existing part-timers will earn at least $21 an hour starting immediately per the contract, according to the Teamsters.
The union also noted that the pay increases for full-timers will keep UPS Teamsters as the highest-paid delivery drivers in the country, with the average top rate rising to $49 an hour. In addition, the Teamsters said the new contract ends what it called the two-tier wage system at the company, with all UPS Teamster drivers currently classified as “22.4s” — or hybrid drivers and warehouse workers who were paid less than full-time drivers — to be reclassified immediately as RPCDs, or regular package car drivers.
A UPS spokesperson sent the following statement from the company: “Our Teamsters-represented employees have voted to overwhelmingly ratify a new five-year National Master Agreement that covers more than 300,000 full- and part-time UPS employees in the U.S.”
Amazon did not immediately respond to a request for comment.
One local supplemental agreement that affects 174 workers in Florida will be renegotiated, the union said. The national master agreement will go into effect as soon as that supplement, which is one of 44 local supplements, has been renegotiated and ratified, the union said.
See: UPS blames ‘late and loud’ Teamsters talks for revenue miss, outlook cut
Also: Actors, writers, hotel housekeepers and grad-student workers are all striking for the same reason
Online retail giant Amazon.com Inc.’s
AMZN,
second-quarter results and third-quarter forecast sales last week were a bet that more consumers would start buying more things, but Wall Street’s expectations for the third quarter overall have only grown dimmer.
With most of the 500 companies that make up the S&P 500 Index
SPX
already through the second-quarter earnings reporting season, slightly more than normal have reported per-share profit that beat Wall Street’s estimates, according to FactSet.
For the third quarter though, analysts now expect a mere 0.2% increase in per-share profit growth overall, according to a FactSet report on Friday, or slightly lower than the 0.4% growth that was expected for the third quarter on June 30,
And with some two months still left in the third quarter, and with that forecast likely to come down as the period progresses, Wall Street’s profit expectations are getting ever closer to turning negative.
Wall Street analysts overall still expect a bigger rebound for the fourth quarter, the FactSet report said. And they expect 2023 overall to eke out a per-share profit gain of 0.8%.
Worries of a U.S. recession emerging at some point during the back half of this year have started to fade at least a little after many economists fixated on the possibility earlier this year when the Federal Reserve was raising interest rates to combat a jump in inflation in 2022 . Some analysts now say savings fatigue could prompt more shoppers to splurge this year, after relentlessly tightening their budgets due to rising prices.
Federal Reserve Chair Jerome Powell last month said policymakers at the central bank had also shucked off their worries of a downturn.
See: Fed no longer foresees a U.S. recession — and other things we learned from Powell’s press conference
“The staff now has a noticeable slowdown in growth starting later this year in the forecast. But given the resilience of the economy recently, they are no longer forecasting a recession,” he said last month.
Not everyone is convinced that a downturn has vanished from the horizon though. Sheraz Mian, director of research at Zacks, told MarketWatch last month that more bearish analysts had kept pushing out their recession forecasts, after being defied by the actual, and more positive, economic data. Some economists continue to push out those forecasts.
“We still expect a recession, but now we are looking for it to begin in Q1 2024 rather than Q3 2023,” Thomas Simons, U.S. economist at Jefferies, said in a research note on Friday.
He said that interest rate hikes from the Federal Reserve were only just starting to affect customer behavior. Households were trying to rebuild their savings, after spending through whatever they had built up during the pandemic. Student-loan payments were returning, he said, and corporate margins were thinning.
“Corporate profit margins are narrowing, and businesses will look to cut costs through layoffs,” he said.
Among S&P 500 index companies, 34 report results during the week ahead, including one from the Dow Jones Industrial Average, according to FactSet.
Results from Walt Disney Co.
DIS,
will likely gobble up more media attention, but earnings from Paramount Global Inc
PARA,
— which oversees CBS, Showtime, Comedy Central and other channels — will offer more detail about how studios are positioning themselves with Hollywood actors on strike. Lions Gate Entertainment Corp.
LGF.A,
also reports.
Results from Tyson Foods Inc.
TSN,
will give investors and customers a brief look at the state of the grocery aisle where higher food prices over the past year have strained spending on other things. Beyond Meat Inc.
BYND,
which also reports during the week, will be hoping new product launches of plant-based meat-like alternatives can overtake analyst skepticism, amid competition with fake meat and real meat alike.
Elsewhere, ride-hailing platform Lyft Inc.
LYFT,
online dating service Bumble Inc.
BMBL,
and video-game maker Take-Two Interactive Software Inc.
TTWO,
also report during the week. And Canadian pot producer Canopy Growth Corp.
CGC,
will get another chance to pick up the pieces, after over-expanding and now trying to hold onto its cash.
Disney drama: One way or another, people on both coasts are mad at Disney
DIS,
Chief Executive Bob Iger right now, as his company prepares to report quarterly results on Wednesday. Shares of Disney are down slightly this year. The company is currently fighting with Florida Gov. Ron DeSantis, who is trying to stamp out Disney World’s self-governing privileges after the company criticized the state’s restrictions on classroom discussion of gender identity. When Iger accused striking actors and writers in Hollywood of not being “realistic,” the actors and writers shot back, noting his hefty executive compensation plan.
While the friction in Florida hasn’t hurt Disney’s parks attendance, the Hollywood shutdown has threatened Disney’s massive film and TV show operations, as Disney+ subscribers fall and investors more aggressively seek profits from studios’ streaming operations. Elsewhere, Rich Greenfield, an analyst at LightShed Partners, said “Pixar and Disney Animation have not had a breakout hit that impacted children’s play patterns and both Marvel and Lucasfilm feel increasingly tired from overuse.”
The sense is growing that more time is needed for Iger to fix Disney’s problems. On Wednesday, analysts may get a deeper sense of how much more, with the chance of more drama between Disney and its home state and the writers and actors the company depends on.
UPS and the Teamsters deal: United Parcel Service Inc. reports quarterly results on Tuesday, as rank-and-file Teamsters vote on a tentative labor agreement struck with the package deliverer in an effort to avert a strike. The deal, if approved, would raise worker pay and give the economy and businesses a breather, after threats of strikes or work stoppages at the nation’s ports and railways were averted over the past year.
Local Teamsters unions have voted overwhelmingly to at least endorse the agreement, between UPS
UPS,
and the Teamsters union, which represents 340,000 UPS workers, but not everyone was happy with the deal. Some part-timers felt the Teamsters could have used their leverage to wrest more from UPS, following a profit windfall at the company. And investors have held out for more detail from UPS executives themselves on what the deal might mean for the bottom line and for shipping prices.
Analysts will be dissecting the impact of the agreement as shipping demand lags, trucking company Yellow Corp.
YELL,
reportedly shuts down and FedEx Corp.
FDX,
tries to slash costs.
Package-delivery giant United Parcel Service Inc. and the Teamsters union on Tuesday said they had reached a tentative five-year labor agreement that would boost jobs, pay and other protections, after increasingly vocal threats of a strike reignited concerns about the impact to the economy and the nation’s shipping ecosystem.
Teamster locals in the U.S. and Puerto Rico will now meet on July 31 to review and recommend the tentative deal, which will cover 340,000 workers, the Teamsters said in a release. Rank-and-file members will vote on the deal starting on Aug. 3, with the voting process running until Aug. 22.
Under the deal’s terms, current full and part-time UPS
UPS,
workers in the Teamsters union will get $2.75 more per hour this year, and $7.50 more over the course of the contract, according to a release.
Current part-timers would have their pay raised to at least $21 per hour immediately, with a 48% average total wage hike over the next five years. New part-time hires would start at $21 per hour and advance to $23 per hour, the Teamsters said.
Full-time UPS delivery drivers in the Teamsters union would see their average top pay rate rise to $49 per hour.
The deal also ends a two-tier wage system at UPS and makes Martin Luther King Day a holiday for union members. UPS will also outfit newer delivery vehicles with air conditioning and cargo ventilation. The deal also ends forced overtime on union members’ days off.
Shares of UPS were up 0.8% in afternoon trade. Shares of rival FedEx Corp.
FDX,
were up 0.5%.
Talks between UPS and the union began in April. Some Wall Street analysts expected both sides to reach a deal, despite a more hardline stance from Teamster leadership.
“Rank-and-file UPS Teamsters sacrificed everything to get this country through a pandemic and enabled UPS to reap record-setting profits,” Teamsters General President Sean O’Brien said in a statement.
“Teamster labor moves America,” he continued. “The union went into this fight committed to winning for our members. We demanded the best contract in the history of UPS, and we got it. UPS has put $30 billion in new money on the table as a direct result of these negotiations.”
UPS Chief Executive Carol Tome, in a separate statement, also praised the deal.
“This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong,” she said.
Shares of United Parcel Service Inc. dropped for the first time in seven sessions Wednesday, after the union representing more than 340,000 employees said the delivery giant “walked away” from the bargaining table after its labor contract offer was unanimously rejected.
The International Brotherhood of Teamsters said, following “marathon” negotiations, that UPS UPS refused to give the union a “last, best and final offer,” as the company said it had nothing more to give.
“This…
Shares of FedEx Corp. fell after hours on Tuesday after the package deliverer offered up a full-year profit forecast that fell short of expectations, as Wall Street zeroes in on the company’s efforts to cut billions in costs over its next two fiscal years following a drop-off in consumer demand.
Not long after the company released those results, FedEx also said
FDX,
that Chief Financial Officer Michael Lenz would retire on July 31. Management said it had begun an external search to fill the position. Lenz, who became CFO in March 2020, will serve as a senior adviser until Dec. 31 to help with the changeover.
The company reported fourth-quarter net income of $1.54 billion, or $6.05 a share, compared with $558 million, or $2.13 a share, in the same quarter last year. Revenue fell to $21.9 billion, compared with $24.4 billion in the prior-year quarter.
Adjusted for goodwill, efforts to slim the business and a legal issue within FedEx’s
FDX,
ground delivery operations, FedEx earned $4.94 a share, compared with $6.87 a year ago.
Analysts polled by FactSet expected adjusted earnings per share of $4.85, on revenue of $22.55 billion.
“The quarter’s results were negatively affected by continued demand weakness and cost inflation, partially offset by cost-reduction actions and U.S. domestic package yield improvement,” management said in a statement.
For the fiscal year ahead, which ends next May, FedEx forecast “flat to low-single-digit-percent” growth in sales, with earnings per share of $16.50 to $18.50. The company said it expects permanent reductions from its cost-cutting program — which it calls “DRIVE” — of $1.8 billion.
For the full year, analysts expect FedEx to earn $18.33 a share, on $90.91 billion in sales. FedEx ended its most recent fiscal year with $90.2 billion in sales.
Shares fell 4% after hours.
FedEx since last year has tried to slash billions in costs amid slowing demand for package deliveries, after inflation forced customers to rethink their spending priorities. It has nudged shipping prices higher, cut flights, cut executive jobs and closed offices. In April, FedEx announced plans to consolidate its air and ground operations into a single organization.
In the process, the delivery service’s stock price has rebounded significantly since getting slammed in September, when it warned of a slowdown in shipping demand. That rebound has put the stock in roughly in the same spot it was a year ago.
The company also reported earnings amid other tensions within the nation’s shipping and transportation infrastructure, after online-shopping demand during the pandemic led to higher shipping prices and thus a surge in profits.
While West Coast dockworkers and their employers reached a tentative deal on a contract last week, Teamsters union members at FedEx’s main rival, United Parcel Service Inc.
UPS,
voted to authorize a strike if UPS doesn’t offer them a contract they don’t like. The friction has led to worries that businesses and customers would have to pay more to have products delivered.
Shares of FedEx Corp. jumped after hours on Thursday after the package deliverer reported third-quarter results that beat expectations and raised its profit forecast, as it tries to battle weaker demand with aggressive cost cuts.
FedEx FDX reported fiscal third-quarter net income of $771 million, or $3.05 a share, compared with $1.11 billion, or $4.20 a share, in the same quarter last year. Revenue fell to $22.2 billion, compared with $23.6 billion in the same quarter last year.
Adjusted…
FedEx Corp. on Tuesday said it planned to slash an extra $1 billion in costs beyond what it outlined in September, amid what management called a “weaker demand environment” that led to softer-than-expected sales for its second quarter.
Still, shares rallied after hours, as investors and analysts focused on the parcel-delivery service’s profit forecast. And the company still managed to squeeze more consumer dollars out of each delivery as package volumes slipped — helped by the surcharges that carriers tack on to bills to offset rising fuel costs.
The company reported earnings as investors looked for clues about holiday spending in an economy where just about everything is more expensive, and as FedEx
FDX,
prepares to raise shipping prices next month.
During FedEx’s conference call to discuss its results, executives described an environment where global demand fell further in the second quarter than it did during a particularly harsh first quarter that sank its stock. While they said package volumes, comparatively, would improve later on in the fiscal year, they said they hadn’t seen much of a change in business yet in China, even as the economy there reopens after pandemic-related lockdowns.
Meanwhile, they said the U.S. was still recalibrating after consumers loaded up on electronics, furniture and other goods bought online during the pandemic.
“I think the main macro issue in the United States is really the e-commerce reset,” Chief Executive Raj Subramaniam said during the call.
The extra billion in savings brings FedEx’s total expected cuts to roughly $3.7 billion for the fiscal year, which ends in May. In September, the company announced up to $2.7 billion in cost cuts for the fiscal year ahead as concerns grew about stalled shipping demand in an inflation-scarred economy.
FedEx also lowered its fiscal 2023 capital spending forecast by $400 million and unveiled a new long-term cost-saving program, called DRIVE, which it hopes will bring more than $4 billion in annualized structural cost savings by fiscal 2025. The company said more details on DRIVE would come during a conference call in the first half of the next calendar year.
Subramaniam said some of FedEx’s cuts would come from digitization and automation in the U.S. and Europe, and other technology that helps trucks deliver more packages per trailer. FedEx has already grounded jets and reduced flights in its large, internationally-focused Express segment, which offers expedited air and ground deliveries. Cuts elsewhere will come from halting Sunday operations in its ground service, where trucks ship goods in the U.S. and Canada, and closing locations that offer copying and printing services, FedEx said in September.
Subramaniam on Tuesday also said that service issues that hurt the company’s results in the prior quarter had improved, and that hangups at Charles De Gaulle airport in Paris had been “largely alleviated.”
For the full year, FedEx forecast earnings per share of $13 to $14. For the full fiscal year, FactSet forecast adjusted earnings of $13.93 a share, with revenue of $94.358 billion.
“While modestly below consensus at the mid-point . . . our sense is that this is in line with (or maybe a bit better than) buyside expectations,” Stephens analyst Jack Atkins said in a note Tuesday, adding that the outlook included the $3.7 million in reductions.
“Net, with most investors sitting this quarter out and the company issuing an outlook that was likely better than some feared, we think the stock reacts positively to these results tomorrow,” he continued.
Shares rose 4.8% in after-hours trade.
FedEx reported fiscal second-quarter net income of $788 million, or $3.07 a share, compared with $1 billion, or $3.88 a share, in the same quarter last year. Revenue slipped to $22.8 billion, compared with $23.5 billion in the prior-year quarter.
Adjusted for costs related to “business optimization,” FedEx earned $3.18 a share, compared with $4.83 the same quarter in 2021.
Analysts polled by FactSet expected FedEx to report adjusted earnings of $2.81 a share on sales of $23.7 billion.
“The FedEx team moved with urgency to make rapid progress on our ongoing transformation while navigating a weaker demand environment,” Subramaniam said in FedEx’s earnings release. “Our earnings exceeded our expectations in the second quarter, driven by the execution and acceleration of our aggressive cost-reduction plans.”
Management said that its Express segment suffered a 64% decline in operating income, as global package volumes fell. But yields — or sales per package, and a measure of how high a price FedEx can charge — rose 8%. Higher fuel surcharges helped that yield figure.
The company’s Ground division, where trucks ship packages in the U.S. and Canada, got a 24% boost in operating income. Cost cuts and a 13% increase in yields helped there, even as package also volumes slipped.
FedEx stock has fallen 35% this year. By comparison, the S&P 500 Index
SPX,
is down around 19%.
Stocks declined again on Friday, closing out September with large losses across the board as the rally from the June lows partway through August faded into memory.
The S&P 500
SPX,
fell 1.5% on Friday. The benchmark index slumped 9.3% for September, leading to a 2022 loss of 24.8%. The Dow Jones Industrial Average
DJIA,
gave up 1.7% on Friday, for a September decline of 8.8%. The Dow has now fallen 20.9% for 2022. The Nasdaq Composite Index
COMP,
pulled back 1.5% on Friday for a September drop of 10.5% and a year-to-date plunge of 32.4%. (All price changes in this article exclude dividends.)
Below is a list of stocks in the S&P 500 that fell the most during September.
It was the worst September performance for U.S. stocks since 2008, according to Dow Jones Market Data. William Watts looked back to see what poor performance during September may portend for October.
All sectors of the S&P 500 were down during September, including five that fell by double digits:
| S&P 500 sector | Sept. 30 price change | September price change | 2022 price change |
| Real Estate | 1.0% | -13.6% | -30.4% |
| Communication Services | -1.7% | -12.2% | -39.4% |
| Information Technology | -1.9% | -12.0% | -31.9% |
| Utilities | -2.0% | -11.5% | -8.6% |
| Industrials | -1.3% | -10.6% | -21.7% |
| Energy | -0.9% | -9.7% | 30.7% |
| Materials | -0.3% | -9.6% | -24.9% |
| Consumer Staples | -1.8% | -8.3% | -13.5% |
| Consumer Discretionary | -1.8% | -8.1% | -30.3% |
| Financials | -1.1% | -7.9% | -22.4% |
| Health Care | -1.4% | -2.7% | -14.1% |
| S&P 500 | -1.5% | -9.3% | -24.8% |
| Source: FactSet | |||
| Company | Ticker | Sept. 30 price change | September price change | 2022 price change | Decline from 52-week intraday high | Date of 52-week intraday high |
| FedEx Corp. |
FDX, |
-2.5% | -29.6% | -42.6% | -44.4% | 01/05/2022 |
| V.F. Corp. |
VFC, |
-2.7% | -27.8% | -59.2% | -62.1% | 11/16/2021 |
| Lumen Technologies Inc. |
LUMN, |
-1.4% | -26.9% | -42.0% | -49.8% | 11/05/2021 |
| Ford Motor Co. |
F, |
-2.4% | -26.5% | -46.1% | -56.7% | 01/13/2022 |
| Charter Communications Inc. Class A |
CHTR, |
-3.0% | -26.5% | -53.5% | -59.8% | 10/07/2021 |
| Adobe Inc. |
ADBE, |
-1.1% | -26.3% | -51.5% | -60.7% | 11/22/2021 |
| Carnival Corp. |
CCL, |
-23.3% | -25.7% | -65.1% | -73.5% | 10/01/2021 |
| CarMax Inc. |
KMX, |
1.3% | -25.4% | -49.3% | -57.7% | 11/08/2021 |
| Advanced Micro Devices Inc. |
AMD, |
-1.2% | -25.3% | -56.0% | -61.5% | 11/30/2021 |
| Caesars Entertainment Inc. |
CZR, |
-0.5% | -25.2% | -65.5% | -73.1% | 10/01/2021 |
| Boeing Co. |
BA, |
-3.4% | -24.4% | -39.9% | -48.2% | 11/15/2021 |
| WestRock Co. |
WRK, |
-1.6% | -23.9% | -30.4% | -43.6% | 05/05/2022 |
| International Paper Co. |
IP, |
-1.2% | -23.8% | -32.5% | -44.0% | 10/13/2021 |
| Western Digital Corp. |
WDC, |
1.1% | -23.0% | -50.1% | -53.1% | 01/05/2022 |
| Newell Brands Inc. |
NWL, |
-0.6% | -22.2% | -36.4% | -47.5% | 02/16/2022 |
| Eastman Chemical Co. |
EMN, |
0.3% | -21.9% | -41.2% | -45.1% | 01/19/2022 |
| Nike Inc. Class B |
NKE, |
-12.8% | -21.9% | -50.1% | -53.6% | 11/05/2021 |
| Seagate Technology Holdings PLC |
STX, |
-2.1% | -20.5% | -52.9% | -54.8% | 01/05/2022 |
| PVH Corp. |
PVH, |
-3.6% | -20.4% | -58.0% | -64.3% | 11/05/2021 |
| Dish Network Corp. Class A |
DISH, |
-2.2% | -20.3% | -57.4% | -70.1% | 10/04/2021 |
| Source: FactSet | ||||||
Click on the tickers for more about each company, including developments that led to their share-price declines.
Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.
FedEx Corp.
FDX,
tops the list because of investors’ harsh reaction to the company’s sales and profit warning on Sept. 16. Claudia Assis and Greg Robb explained the implications of FedEx’s warning for the broad economy.
Shares of Carnival Corp.
CCL,
fell 23% on Friday (for a September decline of 26%) after the cruise giant again reported sales and earnings below what analysts had expected, even though it reported increasing its capacity usage to 92%.
Nike Inc.
NKE,
was down 13% on Friday for a September decline of 22%, after the company warned that discounting to clear inventory would continue to affect its earnings performance. Here’s how analysts reacted.
Adobe Inc.
ADBE,
made the list because of investors’ doubt about its dilutive $20 billion deal to acquire Figma.
The bulk of CarMax’s
KMX,
drop for the month came on Sept. 29, after the used-car dealer missed sales and earnings estimates and indicated that consumers were beginning to resist high prices.
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