US Open: Wall Street opens session in weaker sentiments amid 'triple witching' day 🚩FedEx plunges 14%

• U.S. indices record a weaker opening on the day of the 'three witches' (massive roll-overs in the options, stocks and contracts markets); US100 loses 0.4%
• Semiconductor sector loses; Intel (INTC.US) and Texas Instruments (TXN.US) lead the declines
• FedEx (FDX.US) shares lose more than 14% after disappointing results and citing weaker consumer trends

Today, the US stock market is down slightly after yesterday's rally, with trading volumes slightly higher early in the session. The US100 is struggling to stay above 20,000 points. The bullish positioning of hedge funds and CTAs may itself support hedging demand today, in order to secure a favorable finish to the expiration (settlement) in the options and futures market.

According to Bloomberg, the value of open pull and call options on the SPX oscillates around 5500 points; historically, September's 'three hags' day has led to an average of 1.1% declines in the S&P 500 with exceptions only in 1998, 2001, 2010 and 2016 according to Trader Almanac data. Currently, the ratio of call to put options is 4:1, which clearly supports the bulls and may suggest a better market performance, in the later hours or next week, when with the potential for a 'gamma squeeze'.

Source: xStation5

US100 (M5 interval)
Source: xStation5

FedEx sending a warning sign to the economy?

FedEx reporting results for the first quarter of the 2025 fiscal year indicated that earnings per share came in at $3.60 versus analysts' forecasts of $4.86, while revenues also proved disappointing with $21.6 billion versus $21.97 billion expected on Wall Street. For the full fiscal year 2025 (calendar 2024), FedEx expects EPS in the range of $20 to $21 per share (previously $20 to $22); consensus was $20.71.

• In a commentary, the company pointed out that the weaker results were the result of markedly weaker demand and economic conditions in freight and logistics. FedEx expects low single-digit revenue growth this fiscal year, having previously seen opportunities in the mid-single digits of 5-8%.
• FedEx is cautiously optimistic about H2 2024 trend, however demand conditions in H1 came in weaker than company expected. The Federal Express (sector overseeing air-ground fast shipping network) margins fall to 5.2% in the quarter ended on August 31, from 7.1% a year before.
• It was also one of the worst first quarter profitability outcomes outside the 2009 recession, according to Barclays research. Also, Morgan Stanley stressed out that earnings miss from FedEx was huge and suggests larger risk over a long term, than anticipated earlier. Analysts slashed FedEX price to $200 after the report.

FedEx stock (FDX.US), we see a double top near $300, which, along with a sharp drop below the EMA 200, indicates an entry into at least a medium-term downtrend and a complete negation of upward momentum.  United Parcel Service (UPS.US) is also losing ground on FedEx's wave of declines; the giant's shares are losing nearly 4% and approaching levels not seen since the summer of 2020.Source: xStation5

Interestingly, the Cass Freight Index, which measures the prosperity of the U.S. logistics sector (including, wheeled, shipping), rebounded somewhat in August after a rather worrisome July. Nonetheless, it is apparent that the situation in the transportation sector, which can be a sure indicator of the health of consumers, is not encouraging, the trend is downward, and UPS or FedEX stocks are following suit. The question is whether the September reading will show a deterioration from current levels.

Source: CASS Freight Index / Cass Information Systems, ACT Research