US stocks are showing clear signs of frailty as investors grow increasingly worried about slowing economic growth and corporate earnings.
The markets, however, have held tight to gains made at the end of last week on the Federal Reserve's September 13 announcement of a new QE3 monetary stimulus program.
But the Fed's promise of lower interest rates and faster growth was quickly trumped by Fedex, which turned in a poor quarter and a gloomy business forecast.
The shipper, a bellwether for the US and global economy, cut its profit forecasts and warned of slower business for the rest of the year as it released its disappointing fiscal first quarter earnings.
"Weakness in the global economy constrained revenue growth at FedEx Express during our first quarter and affected our earnings," said chief executive Frederick Smith.
Fedex closed the week down 6.4 per cent at $84.39 -- not enough to drag down the overall market, but enough to spread a cloud over the mood of trade.
Adding to that was roundly glum economic data from China, Europe and the United States, underscoring the sluggishness of the world economy.
The markets held up in part because of the sharp drop in the oil price and Apple's launch of its new iPhone 5, with sales expectations believed by some to be enough to serve as its own economic stimulus program.
The Dow Jones Industrial Average closed the week off 0.10 per cent at 13,579.47.
The broad-based S&P 500 shed 0.4 per cent to 1,460.15, while the Nasdaq lost 0.13 per cent for the week.
Analysts were even surprised that the markets held up as well as they did, given a handful of disappointing US data releases.
"Given the mixed economic data hitting the tape in recent days, we find it somewhat amazing that the stock market remains resilient, not giving up much of the post-Fed QE3 'Bernanke bounce' seen last week," said Art Hogan of Lazard Capital Markets.
Nevertheless, he added, "Stock prices continue to consolidate."
"There is going to be a very painful return to reality when you have companies like Fedex, a global bellwether, (worried about) economic fundamentals," said Peter Cecchini of Cantor Fitzgerald.
"Because nobody really believes the fundamentals; everybody is positioned very lightly," he said.
Even Apple's iPhone 5 launch could not do much more than prop up its shares. The world's biggest company by market cap finally busted through the $700 line, but ended the week up just 1.3 per cent, at $700.09.
Deutsche Bank analyst Chris Whitmore said demand appeared "very robust" and predicted Apple will sell 133 million iPhones by the end of 2012 and 180 million in 2013.
Economic data in the coming week will set the tone of trade, now that most of the big central banks have done their best to spark life into economies.
Releases for August data include consumer confidence (Tuesday), new home sales (Wednesday), pending home sales and durable goods orders (Thursday) and personal income and spending (Friday).
Also coming on Thursday is an update of the estimate for second quarter growth, expected to be unchanged at a sluggish 1.7 per cent pace.
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