Wall Street ended sharply lower on Wednesday, with Target losing nearly a quarter of its stock market value and raising concerns about the U.S. economy after retailers were the latest victims of rising prices.
This was the worst one-day loss for the S&P 500 and Dow Jones Industrial Average since June 2020.
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 fell nearly 25% in their worst session since the Black Monde crash on October 19, 1987, losing nearly $ 25 billion in market capitalization.
The retailer’s results come a day after rival Walmart Inc. cut its profit forecast. SPDR S&P retail ETF down 8.3%.
Paul Christopher, Head of Global Market Strategy at the Wells Fargo Investment Institute, says: “Retailers are beginning to show the effects of declining consumer purchasing power.”
Interest-sensitive Megacup growth stocks have been linked to recent declines and have pushed the S&P 500 and Nasdaq down. Amazon, Nvidia and Tesla Inc. are down 7%, while Apple is down 5.6%.
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 indices have declined, with consumer sentiment and key consumer indicators declining, both below 6%.
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.
Unofficially, the S&P 500 fell 4.04% to close at 3,923.68 points.
The Nasdaq fell 4.73% to 11,418.15 points, while the Dow Jones Industrial Average fell 3.57% to 31,490.07 points.
The S&P 500 is down about 18% 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 Instability Index, also known as the Wall Street Fear Measure, rose 31 points after falling for six consecutive sessions.
The volume on the US exchange was 12.5 billion shares, averaging 13.4 billion in the last 20 trading days.
The number of issues advancing on the NYSE decreased by a ratio of 5.09 to -1; In Nasdaq, a 3.52-to-1 ratio is in favor of reducers.
The S&P 500 posted a new 52-week high and 37 new lows; The Nasdaq Composite recorded 25 new highs and 242 new lows.
(Reporting by Amrita Khandekar and Devik Jain in Bangalore and Noel Randewich in Oakland, California; Editing by Shaunak Dasgupta and Lisa Schumacher)