U.S. stocks fell from all-time highs on Friday as rate-cut euphoria faded, with FedEx (FDX) earnings providing a reality check.
The S&P 500 Index (^GSPC) fell about 0.3% after the benchmark index closed at a record high. The Dow Jones Industrial Average (^DJI) was flat after setting its own record closing high. Leading the pack, contracts on the tech-heavy Nasdaq Composite (^IXIC) fell 0.3%.
Stocks jumped Thursday as investors embraced Chairman Jerome Powell’s message that the Federal Reserve is cutting interest rates sharply to support the economy, not save it — a view reinforced by jobless claims data.
That lightning-fast recovery is now running out of steam, with risks to growth still weighing on growth. Wall Street continues to wonder whether the Fed has fallen behind schedule in its attempt to keep the economy on track for a “soft landing.” Traders are anticipating deeper cuts this year than policymakers’ “dot plots” predict, according to federal funds futures.
Learn more: What the Fed’s Rate Cut Means for Bank Accounts, CDs, Loans, and Credit Cards
Additionally, optimism about the Fed is fueling the risk of a bubble, according to a top strategist at Bank of America. Michael Hartnett said stocks are currently pricing in levels of monetary policy easing and earnings growth that are causing investors to chase gains.
FedEx reported a sharp drop in profit after market trading Thursday, missing Wall Street expectations. The delivery company, a bellwether for the economy, saw its shares fall as much as 14% in early trading.
Elsewhere, Nike (NKE) shares jumped after the sportswear maker named a new CEO as its sales come under pressure.
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