US stocks fell on Friday after FedEx served investors a brutal pre-earnings announcement about the state of the global economy. The Dow closed down 140 points, or 0.5%, lower. The S&P 500 fell 0.7% and the Nasdaq Composite was down 0.9%. All three major indexes logged their fourth losing week out of the last five. The Dow dropped 4.1% for the week, and the S&P 500 and Nasdaq dropped 5% and 5.5%, respectively. Shares of FedEx\n \n (FDX) were down nearly 22% after the company withdrew its full-year guidance late Thursday and warned that a slowing economy will cause it to fall $500 million short of its revenue target. The weakening global economy, particularly in Asia and Europe has hurt FedEx\n \n (FDX) (FDX)’s express delivery business. The company said demand for packages weakened considerably in the final weeks of the quarter. During an interview Thursday on CNBC, FedEx CEO Raj Subramaniam was asked if he believes the slowdown in his business is a sign of the start of a global recession. “I think so,” he responded. “These numbers, they don’t portend very well.” This marks FedEx’s worst one-day drop in history — topping the 16% plunge the day of the 1987 stock market crash. The Dow Transportation Index also fell by more than 5% in Friday trading and FedEx competitor, UPS\n \n (UPS), was also down about 5%. Transport stocks are thought of as a leading indicator for the market at large, and FedEx in particular is seen as a market bellwether. The announcement could contribute to broader declines in a market that’s already heading for a big losing week. Still, some analysts think that Amazon\n \n (AMZN) could be responsible for FedEx’s headache. “Amazon\n \n (AMZN) [recently] launched free shipping software for sellers, and discounted shipping rates,” wrote JPMorgan’s Jack Atherton in a client note. “Amazon has piled money into its logistics capability over the past few years, to the point it has excess capacity for its own needs and is hungry for more share which is being targeted through FBA (Fulfillment By Amazon) and could be weighing on FedEx.” Amazon stock was down more than 2% on Friday. Either way, the third-quarter reporting season begins next month and FedEx’s warning adds to the souring outlook of analysts on earnings expectations. Third quarter earnings-per-share estimates have slipped more than 5.5% since the end of June, according to FactSet data. That’s the largest drop for a quarter since the second quarter of 2020 (when Covid-19 sent the United States into recession). The FedEx announcement also comes as investors worry about a weakening economic outlook as the Federal Reserve hikes interest rates aggressively to bring inflation under control. The University of Michigan’s consumer sentiment index preliminary September reading added to investors’ woes on Friday, it came in at 59.5, its highest level since April but below economists’ estimates. The September survey showed that respondents don’t expect high prices to go away any time soon, consumers said they’re expecting inflation to hit 4.6% over the next 12 months and 2.8% within the next five years. That’s bad news for investors as expectations can be a self-fulfilling prophecy: If consumers anticipate that prices will remain high, they’ll likely spend more and demand higher wages while businesses might raise prices to accommodate higher demand and wages. If expectations are lower, they might rein in spending and ask for smaller wages increases. Friday’s consumer sentiment report is the last major piece of economic data before the Federal Reserve meets next week to discuss monetary policy and determine whether it will raise rates once again in its battle to tame inflation. Still, the largest part of this week’s market loss came on Tuesday after a key inflation reading, August’s consumer price index report, came in hot. The Dow lost 1,200 points on the news– it’s worst decline since June 2020.