The list of companies joining the layoff parade continues to grow, with FedEx (NYSE:FDX) joining the fray. An announcement today that FedEx layoffs will encompass 10% of directors and officers has sent shares of this logistics company rocketing higher. At the time of writing, FDX stock is up approximately 5%.
What’s interesting to see with so many announced layoffs of late is the dispersion with which these job cuts are being carried out. Companies are cutting positions in different sizes, sectors and job groupings to solve for different company-specific problems. In the case of FedEx, it appears the company’s focus is on its front-end workers, with some fat on the back end to be trimmed by this move.
The company notes that this move should bring about a “more efficient, agile organization.” The company’s CEO is focused on improving operational efficiency by right-sizing the business and “better aligning the size of [FedEx’s] network with customer demand.”
Makes sense, and the market appears to agree today. Let’s dive into what to make of these market-moving headlines.
FedEx Layoffs Provide Another Big Surge Today
It’s getting rather common to see stocks pop after a given company announces layoffs. While terrible for workers at these companies, it’s clear corporate America is viewing the New Year as a great time to trim some fat. Accordingly, the hiring sprees that materialized in recent years are on the way out. This year may be the year of corporate restructuring and right-sizing.
It’s interesting to see how long the list of companies cutting jobs has become. These job cuts have spread from tech companies to more economically-sensitive operations such as FedEx. Indeed, it appears most CEOs are of the view that a recession, or at least an economic slowdown, is coming. These moves would not be made in a red-hot market, and we really haven’t seen any sort of coordinated job cuts like these since the Great Recession.
Thus, for now, these moves will continue to be cheered by investors. Of course, we all want to see economic growth return, and I personally view these cuts as a signal things are about to get tough. But in this market, investors are looking for any reason to be optimistic, meaning bad news can be good news from time to time.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.