9:45AM New York – FedEx swings to a loss and estimates lower earnings for the current quarter.

U.S. stocks dropped in the morning hours after weaker than expected earnings from FedEx, Morgan Stanley and Fifth Third Bancorp plans to raise $2 billion.

FedEx reported loss in the fourth quarter on higher fuel costs and asset write down. Morgan Stanley earnings dropped 57% as revenues in the investment banking fell. Fifth Third Bancorp plans to raise $2 billion to maintain its capital reserve requirements above the required by the Fed.

FedEx Corporation provider of freight and parcel delivery services reported fourth quarter revenues increased 8% to $9.87 billion from $9.15 billion a year ago. Net loss in the quarter was $241 million or 78 cents per diluted share compared to net income of $610 million or $1.96 per share, a year ago.

Revenue in the year rose 8% to $38.0 billion from $35.2 billion the previous year. Operating income declined 37% in the period. Net income fell 44% to $1.13 billion from $2.02 billion a year ago. Earnings per share fell 44% to $3.60 from $6.48 per share a year ago. Capital spending for fiscal 2008 was $2.9 billion.

FedEx estimates lower earnings in the first quarter of fiscal 2009 on higher fuel prices and weaker U.S. economy. FedEx projects first quarter earnings between $0.80 and $1.00 compared to $1.58 per share a year ago when crude oil averaged about $70 a barrel. The company estimated fiscal 2009 earnings between $4.75 and $5.25 per share.

FedEx Corporation (FDX: chart) in the last one year traded as high as $119.10 in July 2007 and as low as $80.00 in March 2008. Based on the yesterday’s closing price the company has a market cap of $26.15 billion.