Stocks are falling sharply as Target’s problems restore fears of inflation

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The Dow Jones industrial average fell more than 1,100 points, and the S&P 500 on Wednesday saw its biggest drop in nearly two years as big profits Target and other major retailers fueled investors’ fears that rising inflation could severely cut corporate profits. sales wiped out gains from a solid rally the day before, the latest volatile daily stock fluctuations in recent weeks amid a deepening market downturn. The S&P 500 collapsed by 4%, the sharpest decline since June 2020. The benchmark index is now less than 18% of the record level reached at the beginning of the year. It is ashamed of the 20% reduction, which is considered a bear market. The Dow was down 3.6% and the Nasdaq was down 4.7%. Three indices are at a pace to lengthen the string of at least six weekly losses. “A lot of people are trying to guess the bottom line,” said Sam Stoval, CFRA’s chief investment strategist. “The bottom line is when there’s no one to sell to.” The S&P 500 fell 165.17 points to 3,923.68, while the Dow fell 1,164.52 points to 31,490.07. The Nasdaq was down 566.37 points to 11,418.15. Shares of smaller companies also fell sharply. Russell 2000 fell 65.45 points, or 3.6%, to 1,774.85. Retailers had some of the biggest declines on Wednesday after Target collapsed after a grim quarterly earnings report. Target lost a quarter of its value after reporting earnings that fell to analytical earnings. As a sign of the impact of inflation, especially on shipping costs, Target said its operating margin for the first quarter was 5.3%. He expected 8% and above. The company also said consumers have returned to more usual spending habits, disconnected from TVs and home appliances and bought more toys and travel-related items. The report came a day after Walmart said its profits had suffered from higher costs. The country’s largest retailer was down 6.8%, adding to losses from Tuesday. Weak reports have raised concerns that rising inflation is putting more pressure on a wide range of businesses and could cut their profits more deeply. ” protracted valuation issues for the market, ”said Willie Delwich, investment strategist at All Star Charts. Other major retailers also suffered significant losses. The Dollar Tree was down 14.4% and the Dollar General was down 11.1%. Best Buy was down 10.5% and Amazon was down 7.2%. Technology stocks, which topped the rally the day before, were the biggest deterrent for the S&P 500. Apple lost 5.6%. Overall, more than 95% of S&P 500 shares are closed down. Utilities have also hampered the index, though not as heavily as the other 10 sectors, as investors have shifted money to investments that are considered less risky. Bond yields declined when investors shifted money to lower-risk investments. Yields on the 10-year Treasury fell to 2.88% from 2.97% on Tuesday at the end of Tuesday. The disappointing Target report came a day after the market embraced the encouraging report from the Department of Commerce, which showed an increase in retail sales in April due to increased sales of cars, electronics and other restaurant expenses. Over the past six weeks, stocks have struggled to recover as investors have become increasingly concerned. Trade has been volatile on a daily basis, and any data on retailers and consumers is closely monitored by investors as they try to determine the impact of inflation and whether this will slow costs. A bigger-than-expected cost blow could indicate slower economic growth in the future. ”Of course, consumers continue to spend, but many of the leading retailers cannot survive higher labor costs and higher prices caused by still limited supply chains “, said Quincy Crosby, chief equity strategist at LPL Financial. The Federal Reserve is trying to mitigate the impact of the highest inflation in four decades by raising interest rates. On Tuesday, Fed Chairman Jerome Powell told a Wall Street Journal conference that the U.S. central bank “will have to consider more aggressive action” if inflation fails to ease after previous rate hikes. Investors are worried that the central bank could cause a recession if it raises rates too high or too fast. Concerns remain about global growth as Russia’s invasion of Ukraine puts even more pressure on oil and food prices, while blockades in China to stop COVID-19 cases exacerbate supply chain problems. The United Nations is significantly lowering its forecast for global economic growth this year from 4% to 3.1%. The decline is broad, which includes the world’s largest economies such as the US, China and the European Union .___ Veiga reports from Los Angeles.

The Dow Jones industrial average fell more than 1,100 points, and the S&P 500 on Wednesday saw its biggest drop in nearly two years as large deficits by Target and other major retailers sparked investors’ fears that rising inflation could severely cut corporate profits.

Broad sell-offs wiped out gains from a solid rally the day before, the latest volatile daily stock fluctuations in recent weeks amid a deepening market downturn.

The S&P 500 fell 4%, the sharpest decline since June 2020. Now the benchmark index has fallen by more than 18% compared to the record high it reached earlier this year. It is ashamed of the 20% reduction that is considered a bear market.

The Dow was down 3.6% and the Nasdaq was down 4.7%. Three indices are at a pace to lengthen the string with at least six weekly losses.

“A lot of people are trying to guess the bottom line,” said Sam Stoval, CFRA’s chief investment strategist. “Lowers happen when there is no one to sell to.”

The S&P 500 fell 165.17 points to 3,923.68, while the Dow fell 1,164.52 points to 31,490.07. The Nasdaq was down 566.37 points to 11,418.15.

Shares of smaller companies also fell sharply. Russell 2000 fell 65.45 points, or 3.6%, to 1,774.85.

Retailers were among the biggest downturns on Wednesday after Target collapsed after a grim quarterly earnings report.

Target lost a quarter of its value after reporting earnings that were largely inconsistent with analysts ’forecasts. As a sign of the impact of inflation, especially on shipping costs, Target said its operating margin for the first quarter was 5.3%. He expected 8% and above. The company also said consumers have returned to more usual spending habits, disconnected from TVs and home appliances and bought more toys and travel-related items.

The report came a day after Walmart said its profits had suffered from higher costs. The country’s largest retailer was down 6.8%, adding losses from Tuesday.

Weak reports have raised concerns that rising inflation is putting more pressure on a wide range of businesses and could cut their profits more deeply.

“These retailers have to balance how much higher inflation to pass on to consumers than it consumes, so that’s about profitability issues for companies, as well as some of those protracted valuation issues for the market,” he said. Willie Delwich, investment strategist at All Star Charts.

Other major retailers also suffered significant losses. The Dollar Tree was down 14.4% and the Dollar General was down 11.1%. Best Buy was down 10.5% and Amazon was down 7.2%.

The stock technology that topped the rally the day before was the biggest boost for the S&P 500. Apple lost 5.6%.

Overall, more than 95% of the S&P 500 shares closed lower. Utilities have also hampered the index, though not as heavily as the other 10 sectors, as investors have shifted money to investments that are considered less risky.

Bond yields declined when investors shifted money to lower-risk investments. Yields on 10-year Treasury bonds fell to 2.88% from 2.97% on Tuesday at the end.

The disappointing report from Target came a day after the market appreciated an encouraging report from the Department of Commerce that showed an increase in retail sales in April due to increased sales of cars, electronics and higher restaurant spending.

Over the past six weeks, stocks have struggled to recover as investors have become increasingly concerned. Trade has been volatile on a daily basis, and any data on retailers and consumers is closely monitored by investors as they try to determine the impact of inflation and whether this will slow costs. A larger-than-expected cost blow could indicate slower economic growth ahead.

“Sure, consumers continue to spend, but many of the leading retailers can’t survive the higher labor costs and higher prices caused by the still limited supply chain,” said Quincy Crosby, chief capital strategist at LPL Financial.

The Federal Reserve is trying to mitigate the impact of the highest inflation in four decades by raising interest rates. On Tuesday, Fed Chairman Jerome Powell told a Wall Street Journal conference that the US Federal Reserve “will have to consider more aggressive action” if inflation does not decrease after the previous rate hike.

Investors are worried that the central bank could cause a recession if it raises rates too high or too fast. Remaining concerned about global growth as Russia’s invasion of Ukraine puts even more pressure on oil and food prices, and blockades in China to stop COVID-19 cases exacerbate supply chain problems.

The United Nations is significantly lowering its global economic growth forecast for this year from 4% to 3.1%. The decline is broad and includes the world’s largest economies such as the US, China and the European Union.

___

Veiga reports from Los Angeles.

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