Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of IBM, General Electric, and FedEx Are All Down Today

By Rich Smith – Updated Jun 11, 2020 at 4:15PM

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

These economic bellwethers just got their bells rung.

What happened

Across the nation and across the stock market, stocks are falling Thursday, with blue chip names and economic bellwethers like IBM (IBM), General Electric (GE 2.73%), and FedEx (FDX 2.01%) following the rest of the market in a downward slide.

As of 1:55 p.m. EDT, FedEx stock has lost 6.9% of its value, General Electric shares are off 7.2%, and IBM has slumped 8.2%.

But why are these stocks falling in the first place?

Three large church bells ringing in a tower

Image source: Getty Images.

So what

First things first: If you own one of these stocks, and you're worried it might have just reported some negative news that is dragging its stock down -- don't. In fact, the opposite is more likely the case in every instance. Just this morning, for example, parcel delivery giant FedEx won a big hike in price target from investment bank Daiwa, which thinks the $130 stock is worth at least $147, according to

General Electric, meanwhile, just went on record predicting that it will pull out of its slump and return to generating positive free cash flow next year. As sales of everything from gas turbines to airplane engines revive, GE thinks it should resume generating "high-single-digit free cash flow margins" thereafter.

Even tech giant IBM is getting some positive press this week. After announcing on Tuesday that it will exit the "facial recognition business," the company not only won plaudits from social activists, but also presumably lowered its research and development costs by halting spending on development of that technology.  

Now what

The problem is, it's the bad news -- entirely outside of these companies' control -- that's carrying the day today.

According to the latest data from Johns Hopkins University, coronavirus infections are on the rise in more than 20 U.S. states that have begun reopening for business. This could be the beginning of a second wave of COVID-19 that could tank an economy, already mired in recession, even further.  

What would that look like?

According to the latest estimates from the Federal Reserve, 2020 will see a 6.5% contraction in GDP, and unemployment rates of more than 9% through the end of the year. But according to a report from the Organization for Economic Cooperation and Development, which came out yesterday, a second wave of coronavirus infections could shrink the U.S. economy by 8.5% this year, kneecap any bounce-back and hold it under 2% GDP growth in 2021, and spike unemployment rates as high as 16.9%.

Suffice it to say that wouldn't be good news for the economy, or for the stocks we consider economic bellwethers, either.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends FedEx. The Motley Fool has a disclosure policy.

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

International Business Machines Corporation Stock Quote
International Business Machines Corporation
$121.51 (%)
General Electric Company Stock Quote
General Electric Company
$63.60 (2.73%) $1.69
FedEx Corporation Stock Quote
FedEx Corporation
$151.46 (2.01%) $2.99

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

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.