Filed Under:  U.S. & World

UPS Takes 10% Loss as S&P 500 Declines

Contributed by on January 24, 2015 at 12:13 pm

man leaning on stack of boxesTwo major courier services listed on the S&P 500 suffered a significant reduction in share prices on Friday. The drops came in the wake of an announcement made by UPS that its growth in profits was projected to be as much as 4% lower than previously expected. As a result, shares of both its stock and that of FedEx, its largest private competitor, took a significant slide in price. UPS shares lost 10% of value, whereas FedEx shares rode out the wave slightly better, only losing 2.2% of their total value.

The sudden decrease in expected profit growth was caused largely by overspending during the past few months. In its annual effort to prepare for increased shipping during the holidays, UPS drastically increased its staffing numbers. The expense involved in hiring and training the large number of additional employees was not made up for by holiday revenues.

These losses contributed to a slight decline of the S&P 500 on Friday. The decline took the form of a normalization of prices, which had been rising for 4 consecutive days. The overall increase hit its high water mark on Thursday, following a related spike in European indices. The Friday decline has been relatively slight, and many stocks are still holding considerably above the point at which they opened this week. Shares of UPS are not anticipated to begin rising again until after the release of the company’s fourth-quarter revenue statistics.