What happened
Wall Street was hitting the sell button again this week after new inflation data and earnings results from FedEx pointed to weakness in the economy.
Neither is good news for the leading flooring manufacturer.Week to date, shares of Mohawk Industries (MHK +0.10%) were down 21% as of 1:36 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
NYSE: MHK
Key Data Points
So what
The week got off on the wrong foot when the U.S. Bureau of Labor Statistics released the August report for the Consumer Price Index (CPI) -- a key data point investors watch to gauge inflation. The higher-than-expected increase in the CPI has raised concerns that inflation will remain high longer than expected, which could harm Mohawk's business.
In its last investor update in July, Mohawk said the global economic environment became "increasingly challenging," which was echoed by FedEx in its earnings report released today. FedEx blamed its weak revenue results on "global volume softness that accelerated in the final weeks of the quarter."
While Mohawk has managed to report consistent revenue growth lately due to price increases, management was seeing reductions in consumer inventory in its flooring business, while remodeling investments in most regions remained solid.
MHK Revenue (Quarterly) data by YCharts
Now what
The warnings from FedEx, following Mohawk's cautionary tone in its last earnings report, are raising big red flags for the economy.
While Mohawk stock has already fallen 45% this year, investors should expect more market volatility. At some point, however, bad news will turn to good news, and there could be some fantastic bargains available.
