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Stocks plummet as target predicament renews inflation concerns | Associated Press

New York (AP) — The Dow Jones Industrial Average fell by more than 1,100 points on Wednesday. This is because major earnings failures by Target and other major retailers have stimulated investor concerns that inflation surges could have a significant impact on corporate profits.

As the market slump worsens, widespread sales from the strong recovery of the previous day, the recent volatile day-to-day fluctuations in stocks over the past few weeks, have wiped out profits.

The S & P 500 fell 4% at 3:16 pm in the east. The benchmark index is more than 18% lower than the record high reached earlier this year. This is shy to the 20% drop, which is considered the bear market.

The Dow fell 1,143 points (3.5%) at 31,502 and the Nasdaq fell 4.6%.

Sam Stovall, CFRA’s Chief Investment Strategist, said: “Bottoms occur when there are no sellers.”

Retailers were one of the biggest downturns after Target plunged following a tough quarterly earnings report.

Goal After reporting revenues far below analysts’ expectations, they lost a quarter of their value. As a sign of inflation, especially the impact on shipping costs, Target said its operating margin was 5.3% in the first quarter. I expected more than 8%. The company also said that consumers will return to more normal consumption habits, move away from televisions and appliances, and buy more toys and travel-related products.

The report will arrive the next day Walmart He said the profit was hit by higher costs. The country’s largest retailer fell 7.2%, in addition to the loss from Tuesday.

Weak reports Sustainably rising inflation Strictly restricts various businesses and has the potential to significantly reduce profits.

The retailer suffered the greatest loss. Dollar Tree fell 15.4% and Dollar General fell 11.8%. Best Buy was down 11.6% and Amazon was down 7%.

Technology stocks, which led the market backlash a day ago, were the biggest stumbling block to the S & P 500. Apple fell 5.9%.

Overall, more than 95% of S & P 500 shares have fallen. Utilities, though not as much as the other 10 sectors, have squeezed the index as investors have shifted their funds to investments that are considered low risk.

Bond yields have fallen as investors have shifted their funds to lower-risk investments. The Treasury yield for 10 years fell from 2.97% late Tuesday to 2.89%.

The disappointing report from the target comes the day after the market has backed up a report of encouragement from the Commerce Department. April retail sales increasedDriven by increased sales of automobiles and electronics, and increased spending in restaurants.

Over the past six weeks, stock prices have struggled to get out of the slump amid growing investor concerns. Transactions are volatile on a daily basis, and investors looking to determine the impact of inflation and whether it will drive a slowdown in spending are closely monitoring data on retailers and consumers. A higher-than-expected hit on spending could suggest a slowdown in future economic growth.

The Federal Reserve is trying to mitigate the effects of the highest inflation in 40 years by raising interest rates. On Tuesday, Fed Chair Jerome Powell told The Wall Street Journal that if inflation did not ease after the previous rate hike, the U.S. central bank “needs to consider a more aggressive move.” ..

Investors are concerned that if central banks raise interest rates too much or too soon, they can cause a recession.Concerns about global growth continue Russia invasion of Ukraine While putting more pressure on oil and food prices Blockade in China Stopping cases of COVID-19 exacerbates supply chain problems.

The United Nations significantly Forecast of global economic growth From 4% to 3.1% this year. Downgrades are widespread and include the world’s largest economies such as the United States, China and the European Union.

Veiga reported from Los Angeles.

Copyright 2022 AP communication. all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.

Stocks plummet as target predicament renews inflation concerns | Associated Press

Source link Stocks plummet as target predicament renews inflation concerns | Associated Press

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