The United Parcel Service stock is in a disgraceful line, declining for eight days in a row. There aren’t a lot of company-related issues to blame for the slide, which makes the recent downturn a bit unreasonable.
Assume that the stock of UPS (tick: UPS) fell 0.9% on Thursday, as the S&P 500 rose 0.4%, while the Dow Jones Industrial Average improved 0.3%.
In the seven trading days of Friday, UPS stock fell by about 13%, marking the longest loss since January 2022 when stocks plummeted for nine consecutive trading hours, according to Dow Jones Market Data. On Friday morning, UPS stocks dropped by almost 11% by 2022.
The latest negative aspect is that BofA has reduced its stock quota to Neutral from Buy due to concerns about weakness in tailoring trucks. Analyst Ken Hoexter noted that commodity prices fell in March.
A small load capacity seems to be the reason. The backlog and snarls of supply chain are slightly better compared to recent months. While that is good for people who have things to ship, there is very little in the companies that own the goods.
Shares of UPS fell 1.2% in day trading on Friday. But there are other problems. Comments from the Federal Reserve Gov. Lael Brainard rocked the market on Tuesday. He said it was "very important to reduce inflation," and called on the Fed to reduce the number of incentives it offers to the economy. That could mean the Fed is committed to reducing inflation, even if it means slowing down the economy.
Small economic activity means fewer packages to be shipped.
UPS stock decreased by about 9% from his statement, while the S&P 500 fell by about 1% over the same period. Investors are punishing stock transactions harder than other markets. FedEx (FDX) stocks fell nearly 8% since Tuesday. The Dow Jones Transportation Average is off about 6%. That means the Fed could cause about half of the UPS shares to fall and other stocks.
The comfort of a supply chain, the rising cost, and the measurement benefits may be the cause of the recent decline. Analyst Todd Fowler wrote this week that supply chain barriers are down, but still high. That adds cost and complexity to asset networks. Although inflation remains a problem, duplicating copies means that commodity prices are starting to fall. Fowler noted in his report that property prices declined in March compared to February. "Since spot rates are equal to contract ratings, renewals may begin to measure upwards," added the analyst.
Falling prices and a slower economy are not good for shippers, but Fowler still estimates UPS Buy shares for a target price of $ 265. He is much more concerned now than he had in recent months, but he "does not believe in any way" that we are “in a crisis, or we regard it as inevitable.”
