Wall Street crashed on Wednesday, with Target losing a quarter of its stock market value and raising concerns about the U.S. economy after retailers were the latest victims of rising prices.
Target Corporation’s first-quarter profit fell by half and the company warned of a large margin injury on rising fuel and freight costs. Its shares have fallen more than 25% and are tracking their worst day since the Black Monde crash on October 19, 1987.
The retailer’s results come a day after rival Walmart Inc. cut its profit forecast. SPDR S&P retail ETF down 8.8%.
“What worries people after seeing the target is the need to bring down more (estimated) earnings?” Thomas Hayes, chairman of Great Hill Capital in New York, said. “Consumer sentiment is at an all-time low and inflation is low. So people are looking for signs to control inflation, and the goal is not giving them any today. “
Interest-sensitive Megacup growth stocks have been linked to recent declines and have pushed the S&P 500 and Nasdaq down. Tesla Inc. lost 7.5%, both Nvidia and Amazon more than 6% and Apple and Microsoft each lost more than 4%.
Liz Young, head of investment strategies at SoFi, said: “At this particular moment, growth has outweighed the benefits for stocks, and the market is trying to decide how bad it is going to be.” “The market is volatile for the next six months. We find that there is no need to be intimidated and that the markets react to the negative. “
All of the 11 S&P 500 sector indexes declined, with consumer discretionary and consumer staples down 6.8% and 6.0%, respectively.
Rising inflation, the conflict in Ukraine, protracted supply chain snarls, epidemic-related lockdowns in China, and tightening of monetary policy by central banks have weighed heavily on financial markets in recent times, raising concerns about the global economic downturn.
The Wells Fargo Investment Institute said Wednesday it expects a mild U.S. recession in late 2022 and early 2023.
Federal Reserve Chair Jerome Powell on Tuesday promised that the US Federal Reserve would raise interest rates as high as necessary to stem the rise in inflation, which he said posed a threat to the economy.
Traders are targeting 50-basis point interest rate hikes by the Fed in June and July.
In the afternoon trade, the S&P 500 was down 3.79% at 3,933.73 points.
The Nasdaq fell 4.50% to 11,445.19 points, while the Dow Jones Industrial Average fell 3.34% to 31,565.46 points.
The S&P 500 is down about 17% so far in 2022 and the Nasdaq is down about 27%, hitting growth stocks.
According to refinitiv data, Wall Street’s recent sell-off dropped the S&P 500 trading by almost 17 times its expected earnings, its lowest PE rating since the sell-off caused by the 2020 coronavirus epidemic.
The CBOE Volatility Index, also known as the Wall Street Fear Measure, rose 30.5 points after falling for six consecutive sessions.
The number of issues advancing on the NYSE decreased by a ratio of 5.84 to -1; On the Nasdaq, a 3.67-to-1 ratio is in favor of reducers.
The S&P 500 posted a new 52-week high and 35 new lows; The Nasdaq Composite recorded 25 new highs and 189 new lows.
(Reporting by Amrita Khandekar and Devik Jain in Bangalore and Noel Randewich in Oakland, California; Editing by Shaunak Dasgupta and Lisa Schumacher)