Stocks fall sharply as Target’s woes renew inflation fears
NEW YORK (AP and HEART OF ILLINOIS ABC) - Stocks closed sharply lower on Wall Street Wednesday as dismal results from Target renewed fears that inflation is battering U.S. companies.
The S&P 500, the benchmark for many index funds, fell 4%.
Target lost a quarter of its value, dragging other retailers down with it, after saying its profit fell by half in the latest quarter as costs for freight and transportation spiked. That comes a day after Walmart cited inflation for its own weak results.
The Dow Jones Industrial Average dropped 1,164 points, or 3.6% and the tech-heavy Nasdaq pulled back 4.7%. Treasury yields fell as investors sought safer ground.
Consumers shift again, flummoxing big retailers like Target
The pandemic vastly changed the way Americans spend money and now as they return to pre-pandemic behavior, they’re tripping up retailers again.
That dynamic has only been intensified in recent months as inflation jumps sharply, and the latest financial report from Target underscore the challenges.
Target reported Wednesday that its profit tumbled 52% compared with the same period last year in an environment of rising costs for things like fuel, and also a lightening quick return by consumers to more normalized spending.
Purchases of big TVs and appliances that Americans loaded up on during the pandemic have faded, leaving big retailers with bloated inventory that must be marked down to sell.
Why is Wall Street close to a bear market?
The stock market’s skid this year has pulled the S&P 500 close to what’s known as a bear market.
Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy have caused investors to reconsider the prices they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers.
A bear market is a term used by Wall Street when a market index has fallen 20% or more from a recent high.
The S&P 500 is now down 18.2% from the record high set on Jan. 3.
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