FedEx reported quarterly profit that missed Wall Street estimates on Monday, as employee compensation and other expenses weighed on results.

Shares in the Memphis-based package delivery company fell 5 percent Tuesday.

FedEx and rival United Parcel Service are considered bellwethers for the U.S. economy and investors are monitoring U.S. President Donald Trump's tariff battle with China.

Revenue from China-U.S. trade represents 2 percent of total FedEx revenue and tariffs affect a small portion of that, the company said.

Net profit at FedEx jumped 40 percent to $835 million, or $3.10 per share, for the fiscal first quarter ended Aug. 31.

Profit excluding items came in at $3.46 per share, missing analysts' average estimate of $3.81, according to Thomson Reuters I/B/E/S.

Revenue rose almost 12 percent to $17.1 billion for the quarter, just topping analysts' target of $16.9 billion.

FedEx accelerated $200 million in annual pay increases to April from October, following the passage of Trump's U.S. Tax Cuts and Jobs Act. About two-thirds was earmarked for hourly workers with the remainder going to performance-based incentive plans for salaried employees.

The move contributed to compensation-related charges and other items that lowered results by 48 cents per share in the latest quarter.

"As expected, the quarter's results were affected by our decision to invest in our team members following the passage of the Tax Cuts and Jobs Act," FedEx Chief Financial Officer Alan Graf said in a statement.

"We remain committed to increasing earnings, margins, cash flows and returns this year," Graf said.

To that end, FedEx increased its adjusted earnings forecast to $15.85 to $16.45 per diluted share, from the previous range of $15.65 to $16.25. That forecast includes TNT Express integration expenses and are based on stability on global trade.

FedEx, UPS, and the U.S. Post office are preparing for what is expected to be another record holiday package delivery season.

FedEx this year will boost seasonal hiring about 10 percent to 55,000 workers. It has added year-round Saturday delivery and will again do Sunday deliveries during the holiday season as Amazon.com ramps up the pressure on shippers, FedEx, UPS and the U.S. Postal Service.

—CNBC contributed to this report.