Wall Street Slams the Brakes on Big Rally

Wall Street slammed the brakes on its big rally Wednesday following disappointing profit reports from companies and warnings that the market had simply gone too far, too fast.

• The S&P 500 fell 70.02 points, or 1.5% to 4,698.35 for its worst loss since beginning a monster-sized run shortly before Halloween. Roughly 95% of stocks in the index fell.
• The Dow Jones Industrial Average dropped 475.92 points, or 1.3%, from its record high to 37,082.00 .
• The Nasdaq composite sank 225.28 points, or 1.5%, to 14,777.94.

FedEx tumbled 12% after cutting its revenue forecast. Weakness for FedEx could damage hopes that the economy can conquer high inflation without a recession, the AP reports. But a pair of economic reports were also stronger than expected, and a cooler-than-expected report on UK inflation helped Treasury yields ease.

FedEx reported weaker revenue and profit for the latest quarter than analysts expected. It also now expects its revenue for the full fiscal year to fall from year-earlier levels, rather than being roughly flat, because of pressures on demand. Winnebago Industries, the maker of motorhomes and other recreational products, also fell short of analysts' profit expectations for the latest quarter. It said it sold fewer units than a year earlier because of "market conditions" and had to offer higher discounts. Its stock sank 5.6%. General Mills reported stronger profit for the latest quarter than expected, but its revenue fell short as a recovery in its sales volume was slower than expected. Its stock fell 3.6%.

Still, a pair of reports showed the US economy may be in stronger overall shape than expected. Both consumer confidence in December and sales of previously occupied homes in November improved more than economists had expected. Encouraging signs that inflation is cooling globally also continue. In the United Kingdom, inflation in November unexpectedly slowed to 3.9% from October's 4.6% rate, reaching its lowest level since 2021. Milder inflation is raising hopes that central banks around the world can pivot in 2024 from their campaigns to hike interest rates sharply in order to snuff out further big increases in prices. (More stock market stories.)