Stocks edge up; FedEx sinks after profit warning
ASSOCIATED PRESS September 5, 2012 8:52AM
In a Friday, Aug. 31, 2012, photo, a trader works on the floor of the New York Stock Exchange, in New York. Stocks zigged and zagged Tuesday, Sept. 4, 2012, after reports that the U.S. economy is weakening at a time when China and Europe are also slowing. (AP Photo/Jason DeCrow)
Updated: September 5, 2012 12:46PM
NEW YORK — U.S. stock prices moved higher Wednesday, but the gains were checked by a warning from the huge package delivery company FedEx that its profits would be hurt because of a slowdown in the global economy.
FedEx cited weakness in its express package delivery business. That’s a sign that FedEx’s customers around the world are choosing slower, cheaper delivery options to save money. FedEx’s stock fell $1.18 to $86.36.
“It’s one more piece of news that suggests that the global economy is slowing and therefore makes central bank action more likely,” said Brian Gendreau, market strategist at the investment advisory firm Cetera Financial.
Federal Reserve chairman Ben Bernanke has said the central bank is inclined to provide new stimulus to the U.S. economy if it’s needed. Investors will get more guidance Friday when the government releases its monthly report on employment, which is considered one of the most important barometers for the world’s largest economy.
The Dow Jones industrial average was up 32 points at 13,068 shortly after noon Wednesday. The Standard & Poor’s 500 index gained one point to 1,406. The Nasdaq composite index gained two points to 3,077.
Earlier, the Labor Department reported that U.S. companies got more productivity from their workers this spring than originally estimated. Productivity increased at an annual rate of 2.2 percent in the April-June quarter, up from an initial estimate of a 1.6 percent gain. Labor costs rose at an annual rate of 1.5 percent, slightly lower than the 1.7 percent initially estimated.
Stock indexes were mostly higher in Europe and the yields on government bonds issued by Spain and Italy edged lower, a positive sign that investors are becoming more optimistic about the ability of those countries to repay their debts.
Benchmark indexes rose 0.5 percent in Germany and 0.2 percent in France.
European Central bank President Mario Draghi is expected to reveal details Thursday of a new bond-buying program aimed at cutting borrowing costs for Spain and Italy, the latest flash points in Europe’s government debt crisis. Without some way to reduce the interest rates on the bonds they sell, the two nations could be pushed into asking for a bailout, following a path taken by Greece, Ireland and Portugal.
Among other stocks making big moves:
— Facebook gained 81 cents, or 4.5 percent, to $18.54 after its CEO Mark Zuckerberg said he would not sell any shares for a year. The company also announced a major share buyback.
— Hartford Financial Services Group was trading at $18.21, up 51 cents, or almost 3 percent. The insurer and wealth manager said it had agreed to sell its retirement plans business to Massachusetts Mutual Life Insurance for $400 million.
— Nokia fell 28 cents, or 10 percent, to $2.55. The Finnish company announced a new Windows-based smartphone in New York. Nokia faces tough competition from Apple, which is expected to announce its latest version of the iPhone next week.
— Safeway gained 78 cents, or 5 percent, to $16.60. The supermarket chain said it plans to take its gift card business Blackhawk Network Holdings public by the first half of 2013.