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An earnings double whammy can add fuel to the fire on Wall Street

After a giant limited company that transformed the heart of corporate earnings, investors found that the worst was behind them when Christmas was approaching, just receiving a rude wake-up call.

Income reports for late season Tuesday afternoon from FedEx Corp.

FDX, + 1.55%

and Micron Technology Inc.

MU, + 0.68%

contained worrying forecasts that indicate a global economic slowdown could be on the horizon. After a wave of gloomy forecasts from technology companies slammed stocks earlier in the quarter, the double whammy will probably raise concerns about the bigger economy in the coming year.

FedEx announced a plan for employee buyouts to cut costs despite earning earnings expectations by more than $ 1[ads1] billion in quarterly earnings. CEO Fred Smith explained that the company reduced revenue guidance for 2019 and put cost savings due to a decline in activity in Europe and China, and mentioned the effect of a trade war between the US and China.

"In the US, growth remains solid, driven by robust spending and favorable conditions in the industrial sector. Internationally, the economic strength seen earlier this year, due to a slowdown, FedEx's managing Rajesh Subramaniam said in expanding Smith's comments." The peak of global economic growth now appears to be behind us. "

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Micron's Problems Was not a surprise to all who had been aware: Due to lack of supply and high demand for memory chips last year, many technology companies bought memory chips in bulk earlier than usual this year and now have overstuffed inventory of equipment. Micron's forecast error on Tuesday was off a completely different scale, but predicting earnings of more than $ 1 billion below the level analysts expected.

"While we finish the 2018 calendar on h the eels with outstanding profitability and revenue for both Micron and the industry, We believe we are entering a period of weaker market conditions, "said Sanjay Mehrotra, managing director in his conference call on Tuesday. "We take cautious measures to adapt our production facilities to the changing demand environment."

While Micron did not announce any specific work reductions on Tuesday, Finance Director David Zinsner said the company would be "implementing cost controls across the company, including tighter controls on the right side, vacation plan downsizing and reductions in discretionary expenses."

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The struggles for FedEx and Micron could only be company-specific and not endemic by a major decline, but both companies have strong visibility in key early indicators in their ecosystems. A possible decline in freight from Europe and China will appear for FedEx long before shipping companies report actually weaker financial performance.

Micron's memory chips have been a key component of the major data centers built globally, a strong driver for the overall economy, and a long-term decline in sales for the company is another sign that the larger technological ecosystem is slowing down. Like the chip companies reported earlier in the quarter, Micron management emphasized that they expect the company to jump back in the second half of 2019, but offered little evidence of that theory.

Most importantly, Wall Street is already on the verge of devastating decline in the fourth quarter, weak forecasts from two companies with more data than their earning predecessors and key positions in the supply chain will not go well. With just two weeks before the new year comes, it hopes that earlier signs of an economic downturn will disappear with the calendar likely to disappear completely.

The FedEx share fell 6% in demand trading Tuesday, and others in the same sector also fell, with United Parcel Service Inc.

UPS, + 0.42%

Declining 3.5% and XPO Logistics Inc.

XPO, -2.94%

loses about half a percent. Micron shares declined 9% and also seemed to affect suppliers of chip equipment like Lam Research Corp.

LRCX, + 1.66%

(down 3.9%) and Applied Materials Inc.

AMAT, + 1.87%

(down 2.6%). Micron shares had already fallen 17.1% so far this year and FedEx had fallen 25.9% while the S & P 500 Index

SPX, + 0.01%

has fallen 4.8% so far this year.

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