Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of United Parcel Service Fell Today

By Lou Whiteman - Mar 11, 2020 at 5:55PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A report about a potential CEO change is adding additional uncertainty in a trying time for the transport giant.

What happened

Shares of United Parcel Service (UPS -0.20%) fell more than 5% on Wednesday, as investors continue to fear the COVID-19 coronavirus will lead to a global economic slowdown that will eat into shipping volumes. UPS also could soon get a change in the C-suite, adding to the uncertainty surrounding the stock.

So what

UPS and other shipping companies have been under pressure for weeks over concerns about falling shipping volumes. There was some concern about the health of the global economy even before the coronavirus outbreak, and investors are now worried the outbreak will slow economic activity in key parts of the world.

A UPS truck driver posing next to his rig.

Image source: UPS.

The closely watched Cass Freight Index was down 9.4% year over year in January, an indication of the weakness in global shipping even before the coronavirus impact began to spread globally. The fear now is that the outbreak could exasperate that weakness, sending us into a full-fledged recession.

UPS shares were under further pressure due to a report in the Atlanta Business Chronicle saying that longtime CEO David Abney may retire soon. Abney has been CEO since September 2014 and has a strong reputation on Wall Street with investors.

Now what

Markets hate uncertainty, and the combination of continuing coronavirus concerns and the potential for a CEO change is more than enough reason for investors to run for the exits during a sell-off.

UPS shares are now down 24% year to date, and a potential recession is likely priced in. But until there is more clarity about how severe the coronavirus impact on global trade will be, and how long that impact will last, it is going to be hard for stocks like UPS to find a bottom.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

United Parcel Service, Inc. Stock Quote
United Parcel Service, Inc.
UPS
$184.63 (-0.20%) $0.36

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.