Stock market news today: Stocks press higher as rally rolls on

FedEx (FDX) shares fell as much as 10% early Wednesday after the company’s disappointing forecast offered late Tuesday.

The shipping giant now expects revenues to decline by a low-single-digit percentage next year after having previously forecast revenues to stay flat.

The company mentioned in its earnings call a “difficult demand environment.” Given the company’s reach across industries and geographies, there may be some read-through for some investors on the state of the global economic recovery.

But for years now, the struggles at FedEx have been mostly about FedEx itself.

Over the last six years, the stock has gone nowhere while the S&P 500 has gained 75%.

The current challenges at FedEx mostly center on the company’s push to integrate its Express, Ground, and other business units into a single org. Back in 2016, the company spent $5 billion to acquire TNT Express to expand its global reach. Nearly eight years later, the transformations promised by this deal continue to be worked out.

“Throughout this year, there has been a lot of talk of cost actions taken to rightsize the business for the current demand, but despite this, Express margin has remained near trough levels for over a year,” Jefferies analyst Stephanie Moore wrote in a client note on Wednesday.

Moore and her team have a Hold rating and a $280 price target on the stock. With Wednesday’s move lower, FedEx shares were trading at closer to $252.

“Investors have been underwriting a structural change at Express and right now we think there is more doubt than ever if that structural change is really there or if the cost structure at Express is simply too high,” Moore added. “Waiting for volumes to return to see the benefits of the cost actions isn’t enough for investors, especially when considering this volume inflection may come as the company is simultaneously integrating Express and Ground and pulling off one of the largest corporate restructurings in the company’s history. We continue to be less optimistic than the Street on this front.”

For any company, every quarterly update offers two lenses through which investors can primarily judge these results — the operating environment and the business’s strategy.

For FedEx, the latter matters much more than the former right now.

Paramount Global (PARA) stock ticked higher in early trading on Wednesday, up about 2%, after Wells Fargo analyst Steve Cahall upgraded shares to Equal Weight from Underweight.

The analyst, who also upped his price target to $18 a share from the prior $12, cited “higher deal probability” after multiple outlets reported Shari Redstone could sell her family’s controlling stake in the company.

Redstone currently serves as the non-executive chairwoman of Paramount Global and president of her family’s holding company, National Amusements (NAI), which controls the company through its class A shares.

Private investment firm RedBird Capital, along with Skydance Media CEO David Ellison, have been named as two potential buyers for the stake.

Acquiring National Amusements shares could allow RedBird and Skydance to take control of the company while avoiding a full purchase of it. The group could then offload undesirable assets from there or find a strategic partner.

“M&A headlines change our thesis around PARA given underlying asset potential,” Cahall wrote in his note to clients. “We continue to believe that NAI might like to sell a controlling stake to a content operator that would protect the significance of Paramount Studios. i.e. willing buyer(s), willing seller.”

Cahall added a future owner couldpotentially shut down Paramount+, which would allow the company to license its content — which includes NFL streaming rights, films, and original series like “Yellowstone” — to other streaming players.

Overall, the analyst estimated about $10 billion in post-tax proceeds for all divested assets.

Read more here.

US stocks opened lower on Tuesday — signaling a possible pullback in a record-setting rally.

The Dow Jones Industrial Average (^DJI), S&P 500 (^GSPC), and tech-heavy Nasdaq Composite (^IXIC) each ticked down about 0.2% shortly after the opening bell.

The US housing market will remain in focus for investors on Wednesday with the weekly read on mortgage applications due out at 7:00 a.m. ET and existing home sales set for release at 9:00 a.m. ET.

December’s read on consumer confidence from The Conference Board is also due out at 10:00 a.m. ET.

The market’s rally continued on Tuesday, with the Dow notching another record high and the S&P 500 inching closer to taking out a record of its own.

The Nasdaq Composite also eclipsed 15,000 on Tuesday for the first time since January 2022, when the tech index was on its way down to start its most challenging year in decades.