By Doug Busch
There's no denying that United Parcel Service has lost much of the market dominance it once enjoyed.
Once commanding over 5% of the Industrial Select Sector SPDR Fund (XLI), UPS now accounts for just over 1%, ranking a distant 25th in the ETF's holdings. The stock is down nearly 39% from its 52-week high, battered by persistent labor challenges and competitive pressure from Amazon.
The selloff has been steep, and arguably self-inflicted. With shares under pressure, UPS now sports a dividend yield of 7.5%. That's not a typo, but rather a reflection of just how far sentiment has soured.
Between February and mid-July, the stock traded in lockstep with rival Federal Express, but more recently it diverged sharply, falling out of bed. The days when these logistics titans served as a reliable proxy for U.S. economic health appear to be firmly behind us.
Technical analysis shows the road ahead for these stocks is still a bumpy one.
Markets rarely move in a straight line, and the relentless selling in UPS might be nearing exhaustion, at least temporarily, following another ugly earnings reaction this week.
The UPS weekly chart suggests it could be setting up for a tactical rebound, or what traders often refer to as a classic "dead cat bounce." Think of this as a brief, temporary rise in a stock's price after a steep decline -- giving the false impression that it's recovering when it's likely not.
Since the second half of 2022, UPS has shown a pattern of brief, deceptive rallies following steep declines. Each time, the stock staged a short-lived uptick before resuming its downward trajectory.
This historical behavior warrants caution. In our view, the path of least resistance still points lower, with a grind toward the low $80s -- a retest of the COVID-era lows -- not out of the question. Only from those levels might the stock find solid footing and mount a more meaningful recovery back toward the $100 mark.
UPS stock was trading at $86 Thursday.
Federal Express, the freight and logistics giant, isn't inspiring much confidence either, even after a sanguine earnings report in late June.
The trouble began when the stock repeatedly failed to decisively break above the very round $300 level between July and November of last year. So far in 2025, the stock has slumped 18%, compared with a 29% drop for rival UPS.
Technically, FedEx stock remains trapped below a declining 200-day simple moving average, a sign that the long term picture is still muddied. That trendline began turning lower as a bearish rising wedge pattern emerged in April. This formation is defined by higher highs and higher lows within converging trendlines, signaling a narrowing rally with weakening momentum.
Thursday's breakdown below the $226 trigger could see a swift move toward the $200 level.
Federal Express was trading at $222.87 Thursday.
One logistics name showing relative strength, however, is Pitney Bowes.
The stock is up 57% so far this year and continues to display bullish momentum. Ahead of its Wednesday earnings release, the stock had declined in five of the last six sessions, each of those five closing at session lows, a bearish signal.
On the weekly chart, round-number resistance at $10 has been a key level, capping gains through the first half of 2021. The stock briefly broke above that level in February before slipping back below, likely flushing out weak hands.
Its recent push back above $10 suggests that former resistance is now acting as support, a potentially bullish setup going forward.
Pitney Bowes was trading at $11.51 Thursday.
Write to Doug Busch at douglas.busch@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 31, 2025 13:29 ET (17:29 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.