These Bellwether Stocks Scared Wall Street on Thursday

Stock investors haven't enjoyed September and October, as extreme volatility has brought major-market benchmarks to their weakest levels in months. Declines for the Nasdaq Composite (^IXIC 2.02%) were the most extreme, but even the Dow Jones Industrial Average (^DJI 0.40%) and S&P 500 (^GSPC 1.02%) didn't fare very well.

Data source: Yahoo! Finance.

Investors are right in the middle of third-quarter earnings season, and in times of turmoil, they often look for signs from some of the biggest companies in the market. United Parcel Service (UPS 0.14%) and Mastercard (MA 0.07%) often act as bellwethers for economic activity, and shareholders weren't too happy with the pictures they painted in their respective quarterly-financial reports. Read on to learn what UPS and Mastercard had to say and the conclusions that investors drew.

UPS deals with profit headwinds

Shares of United Parcel Service fell 6% on Thursday. The shipping giant  reported third-quarter financial results that showed how difficult an environment it faces right now, and it also cut its guidance for the remainder of the year.

The numbers from UPS were stark. Revenue of $21.1 billion was down 13% year over year. Operating profit plunged by nearly half on an adjusted basis, and adjusted earnings of $1.57 per share were down 47.5% from year-ago levels.

UPS CEO Carol Tomé pointed to unfavorable macroeconomic conditions that weighed on global demand during the quarter. Domestic revenue was down 11% on a 12% drop in daily volume, and even a slight increase in pricing couldn't prevent big declines on the top line. Soft economic conditions in Asia and Europe weighed on international sales, which were also down 11%, and UPS' supply chain solutions segment suffered the biggest hit with a 21% drop in revenue.

Shareholders didn't like to see UPS cut its full-year revenue target, now expecting between $91.3 billion and $92.3 billion for 2023. That was down from previous guidance for about $93 billion, and with key customers like Amazon.com (AMZN 3.43%) looking to cut costs by using less profitable ground-based transportation options, the headwinds could keep hitting UPS for some time to come.

Mastercard investors expect consumers to slow their spending

Shares of Mastercard were also 6% lower on the day. The credit card giant's Q3 financial results at least showed some level  of growth, but consumers appear to be coming under pressure, and that spooked shareholders to some extent.

Mastercard reported revenue of $6.5 billion, up 14% year over year. Adjusted net income of $3.2 billion was up 23% from year-ago levels and worked out to $3.39 per share in earnings. Mastercard saw strength in most of its business units, with gross dollar volume growing 13% to $6.7 trillion and cross-border volume soaring at a 26% rate. Mastercard's value-added services business also enjoyed strong growth of 17%, and the company did a good job of keeping operating expenses in check.

Unfortunately, Mastercard believes that Q4 revenue growth won't keep up with the high expectations of those following the stock. Despite few signs of slowing spending on credit and debit cards, the company projected low double-digit percentage growth in overall sales, which would be below current forecasts.

Many economists have expected consumers to cave in with their spending long before now. If high interest rates finally force consumers to pull back, then Mastercard could be among the first to see the impact.