Key Highlights

● FedEx beat estimates on both EPS and revenue.

● The company raised its full-year outlook.

● The report was FedEx's first after its Freight spin-off.

● Other freight-linked stocks also fell the same day.

FedEx shares edged lower on Wednesday, October 28, after its quarterly report, even though the delivery giant topped estimates and raised its full-year outlook.

FedEx (NYSE:FDX) slipped after its latest report, an unusual reaction for an S&P 500 company that beat Wall Street's forecasts on both earnings per share and revenue and lifted its outlook for the full year. According to a closing recap, the shares moved lower following the results, though the decline was modest.

A Quarter of Firsts

The report carried extra significance. It was FedEx's first since a realignment of its fiscal year and the spin-off of its FedEx Freight less-than-truckload business, according to the same recap. That restructuring changes the shape of the company's reported numbers, which can make year-over-year comparisons harder for investors to read.

FedEx beat estimates on both earnings per share and revenue and raised its outlook for the year. When a company beats and raises and the stock still falls, investors often appear to have expected even more, or to be focused on details below the headline figures.

A Tough Day for Transports

FedEx was not the only freight-linked name under pressure. During the regular session, Landstar System (NASDAQ:LSTR) tumbled after higher insurance and claims costs hit its earnings, while C.H. Robinson (NASDAQ:CHRW) slid as a freight recession weighed on rates. Old Dominion Freight Line (NASDAQ:ODFL) also fell after its less-than-truckload volume slipped.

Oil prices added to the cost backdrop for shippers. West Texas Intermediate crude settled at $102.78 a barrel, up $2.88 and back above $100, while Brent settled at $115.32. Fuel is one of the largest variable costs for an air and ground carrier like FedEx, though it typically passes some of that on through surcharges.

The Broader Market

The S&P 500 closed at 7,743.98, up 21.38 points, for a third straight gain. The Dow Jones Industrial Average rose 97.53 points to 52,475.10. Gains were narrow: an equal-weighted version of the S&P 500 edged lower, and trading volume ran below its 20-day average. Industrials as a sector finished higher.

The Federal Reserve left its benchmark rate range unchanged in a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a hike. Long-dated Treasury yields climbed, with the 10-year pushing past a key psychological threshold.

What to Watch

Investors will be looking for detail on how the Freight separation affects margins and cash flow, as well as management's view on package volumes heading into the holiday peak season.

Thursday, October 29, offers fresh macro data that could inform the shipping outlook. The advance estimate of third-quarter GDP and September PCE inflation figures arrive at 8:30 a.m. ET. Caterpillar (NYSE:CAT), Mastercard (NYSE:MA) and Merck (NYSE:MRK) report before the open, and Amazon (NASDAQ:AMZN), a giant in package delivery, reports after the close.