- By Paul R. La Monica
UPS had investors feeling brown and blue Tuesday. The shipping giant's profits were lower than expected. Even worse, the company cited economic "uncertainty" as a reason its outlook is not too hot. UPS fell 5% Tuesday and its bad news dragged down shares of FedEx as well.
I'm bummed by the latter's slide since FedEx was my pick for the Best Stocks for 2012 contest over at InvestorPlace. For what it's worth, FedEx is still up year-to-date. UPS is still barely in positive territory too. Five of my colleagues in the contest have picked stocks that are in the red.
- But the challenges facing UPS and FedEx are by no means unique though. And while the concerns about "economic uncertainty" may seem like a convenient excuse, businesses around the globe do have legitimate reason to cut back on spending --- which hurts shipping demand at UPS and FedEx.
The problems in Europe are real and there is no solution in sight. Congress is not likely to do businesses any favors by waiting until the last minute to deal with the fiscal cliff of tax hikes and spending cuts. Add it up and there could be more pain ahead for UPS, FedEx and other multinational firms.
- That is a concern. And it proves yet again that the whole notion of decoupling is a myth,
- There is a good chance of that. I discussed this more in today's Buzz video.
- Still, the scariest thing about the UPS report may be that the U.S. is finally really starting to show some signs of economic strain as well. America has been thought to be "the least bad" of the major developed countries. But is that no longer the case?