A FedEx delivery truck exits a facility in Brooklyn, New York City
A FedEx delivery truck exits a facility in Brooklyn, New York City, U.S., May 9, 2022. Reuters

Shares of FedEx slumped 20% on Friday as the delivery heavyweight's withdrawal of a recently issued forecast amplified worries over softening demand as consumers across the world battle surging inflation.

At current levels, about $11 billion in market capitalization was set to be wiped out and would also mark the stock's steepest one-day percentage drop, surpassing a 16.4% tumble on Black Monday in 1987.

"We suspect that headwinds from an inflation-fatigued U.S. economy, a resource-constrained European economy, and second-order effects from lockdowns in China proved too much to overcome," Cowen analyst Helane Becker said.

The U.S. firm joined major global logistics peers including Hong Kong's Cathay Pacific Airways and France-based transporter CMA CGM in signaling that consumers are saving for essentials such as gas and food ahead of the holiday season as surging prices discourage casual shopping.

Rival United Parcel Service shed 5.7%, XPO Logistics dropped 4.5% and e-commerce giant Amazon.com slipped 2.6%, while U.S. stock index futures were down by about 1%. [.N]

Across the Atlantic, Germany's Deutsche Post shed 4.6%, London's Royal Mail fell 10.2% and Copenhagen-based DSV dropped 5.7% after the news.

FedEx's quarterly results miss comes as investors fret over the U.S. Federal Reserve's rapid pace of interest rate hikes to curb soaring prices that threatens to tip the economy into a recession.

"It seems unlikely that they will cut prices in an effort to boost shipments. However, they may become part of a growing trend towards layoffs contributing to the eventual easing of wage pressures," said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

FedEx Chief Executive Raj Subramaniam warned on CNBC on Thursday that he believes a global downturn is impending.

In response to a question of whether the economy is "going into a worldwide recession," Subramaniam said "I think so. But you know, these numbers, they don't portend very well."

However, some analysts believe FedEx's dour performance in the first quarter is largely a company-specific issue.

"Clearly, there are questions about the direction of the global economy, especially in Europe and Asia, but we struggle to see how that accounts for the entirety of this quarter's miss," Stifel analysts said in a note.

J.P. Morgan analysts said FedEx's results would have been worse if not for the fuel surcharge the company imposed due to rising oil prices.