The US firms have started to paint a grimmer picture of the economy. A whole host of US companies across industries, sectors like auto, delivery giants, steel companies, and retailers have issued warnings in the last one month citing high inflation, and bleak demand globally, and this has raised worries that the US may not be able to avoid a hard landing. It also gives an indication perhaps the coming earnings season in the US may not be so rosy.

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Ford Motor shares suffered their worst day in more than 11 years, with a 12 percent decline after the automaker pre-released part of its third-quarter earnings report and warned investors of a whopping $1 billion in unexpected supplier costs and pushed delivery of vehicles to the next quarter. This announcement also caught several people off guard, as expectations were that supply chain problems for automakers were easing.

Ford’s warning comes less than a week after delivery company FedEx dropped the ball as earnings missed estimates and the company pulled its annual guidance, due to slowing global demand. FedEx cited macroeconomic weakness in Asia and service challenges in Europe.

Ford and Fedex’s announcements have only added to the growing gloom from companies across industries.

General Electric company’s chief financial officer warned that the company is seeing pressure on cash flow amid supply-chain snags. While industrial titans US Steel Corp., Alcoa Corporation and Nucor Corp all have said deliveries are waning.

The Chief Executive Officer of McDonald's Corp said he expects a minor US recession in 2023 and a more significant one in Europe.

Even retailers in the US like Walmart and Target reported large stockpiles of unsold inventory. This is all just evidence that the US economy is slowing and perhaps a soft landing may seem almost impossible.

These downbeat corporate updates from big businesses have added to the market worries that this is just one of the many, we are going to see many more in the coming days. There could be margin compression and some softening in the topline numbers in the third-quarter earnings in the US.

Analysts say it could be the perfect opportunity to throw the baby out with the bathwater and get the opportunity to use all the negative information in your balance sheet. But markets will watch to see what impact this has on corporate balance sheets.

First Published:Sept 21, 2022 3:18 PM IST