FedEx might offer the clearest look at the disconnect between the soaring stock market and the listless global economy.
The world's largest freight carrier posted a 45% drop in its fourth quarter profits and offered its investors a cautious outlook for 2014, noting that customers are looking for lower-cost carriers internationally. FedEx said its outlook was based on expectations of just 2.3% GDP growth for the United States.
So how did the market respond? FedEx's (FDX) stock jumped more than 3%.
This week? More like this year! All three major stock indexes are up between 15% and 17% in 2013 even though few economists are predicting robust earnings growth.
To be fair, FedEx did beat analysts' expectations. But with its stock up more than 12% this year, the jubilant response from investors to a decidedly blah outlook shows that investors may be more interested in what the overall market is doing as opposed to specific company fundamentals.
Investor sentiment about FedEx didn't spill over to its top rival though. Shares of UPS (UPS) were down slightly.
FedEx has been "realigning" its business for some time, and that does seem to be helping earnings. The company has been cutting staff through what it euphemistically called a "voluntary employee separation program."
Investors don't seem to think it's dead anymore.
Back the truck up! Shares of two major trucking companies were on fire Monday.
YRC Worldwide (YRCW) surged 41%, and Arkansas Best (ABFS) jumped 39%.
The gains pushed the Dow Jones Transportation Average (DJT) to an all-time high.
It was a remarkable achievement considering that FedEx (FDX), one of the largest components of the transport index, was not the main driver, as one trader pointed out on StockTwits.
impressive (not fedex MORE
Caterpillar reported a sharp drop in sales to its worldwide network of dealers Wednesday, sparking a sell-off in its stock and raising worries of a global slowdown for the construction industry.
Shares of Caterpillar (CAT), which makes heavy construction equipment, dropped nearly 2%, even as the Dow Jones industrial average hit a new intraday record high.
In fact, Caterpillar was the only Dow component in the red for much of the MOREMaureen Farrell - Mar 20, 2013 1:29 PM ET
This article was published in the April issue of Money magazine.
This may be an online, on-demand world, but as long as businesses still need to ship stuff to customers, transportation stocks will remain a key barometer for investors. That's why Dow Theory, a market-timing indicator rooted in the smokestack economy of the late 19th century, remains relevant in the digital age.
This once-popular gauge tracks the Dow Jones industrial MOREPaul R. La Monica - Mar 14, 2013 10:57 AM ET
Packaging and shipping company United Parcel Service (UPS) isn't doing much for the broader stock market today.
While investors cheered UPS's third-quarter earnings, sending the stock up more than 2% Tuesday, it wasn't enough to offset the other dismal earnings reports coming out. U.S. stocks have sold off all day after Dow components DuPont (DD), United Technologies (UTX) and 3M (MMM) issued disappointing reports.
UPS took the middle road, not really MOREMaureen Farrell - Oct 23, 2012 1:45 PM ET
In a world fraught with uncertainty and volatility, the executive team at Caterpillar (CAT) can evidently see the future -- three years into the future. The equipment maker slashed its revenue and profit forecasts for 2015. It cited the likelihood of "modest" economic growth at an industry conference this week.
Should growth fall farther than the company's modest predictions, Caterpillar's CEO Douglas Oberhelman promised that investors would still find reasons MOREMaureen Farrell - Sep 25, 2012 4:42 PM ET
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
The Federal Reserve and European Central Bank are doing everything they can to keep the market rally going. But guess what? It's time to channel Doris Day and Judy Holliday. The party's over.
When you take a MOREPaul R. La Monica - Sep 18, 2012 12:58 PM ET
|Big McDonald's comeback runs into trouble|
|Apple sales fall for second straight quarter July 26|
|Why Marissa Mayer couldn't save Yahoo|
|eHarmony's co-founder and star of its ads is stepping down July 26|
|Inside Tesla's ginormous battery factory|