Wall St drops to two-month lows as recession fears mount

STORY: U.S. stocks fell to two-month lows on Friday as a warning of an impending global slowdown from FedEx hastened a broad sell-off at the end of what was an already-tumultuous week on Wall Street.

The Dow dropped nearly half a percent. The S&P shed almost three-quarters of a percent and the Nasdaq slid nearly one percent…

the S&P and Nasdaq suffering their worst weekly percentage plunges since June.

A deluge of mixed economic data, dominated by a hotter-than-expected inflation report focused investors on an all-but certain interest rate hike of at least 75 basis points expected at the conclusion of the Fed's monetary policy meeting next week.

Ross Mayfield is Investment Strategy Analyst at Baird.

“I think this week just proved that this is a longer-term fight than the market wants it to be. [FLASH] I think the thing from this week is what we saw in core inflation, what we saw in services inflation. And maybe one other thing to watch in Chair Powell’s press conference next week is his comments on the labor market. Because when you see broad inflation in the core metrics – so exclude energy, exclude food – when you see broad inflation in those core industries, in those core sectors, that’s wage pressure. That’s a too-tight labor market that the Federal Reserve needs to cool down.”

Financial markets have priced in a 18% likelihood of a super-sized, 100 basis point increase to the Fed funds target rate on Wednesday, according to CME's FedWatch tool.

Risk-averse sentiment went from simmer to boil in the wake of FedEx’s withdrawal of its earnings forecast late Thursday, citing signs of dampening global demand. FedEx shares tanked by more than 21%, the biggest drop in the S&P 500.

Peers UPS and XPO Logistics also slid, as did shares of