Dow drops 1,000 points on renewed inflation fears

Shares plummeted on Wall Street on Wednesday afternoon, driven by sharp falls in retailers as Target collapsed after issuing a sad quarterly earnings report.

The Dow Jones Industrial Average fell 1,100 points, or 3.4%, to 31,536 at 2 p.m. EST. The S&P 500 lost 3.9% and the Nasdaq 4.5%.

Target lost a quarter of its value after reporting gains that fell far short of analysts’ forecasts, though it cited higher costs. The report comes a day after Walmart said its profits were affected by higher costs. Walmart, the nation’s largest retailer, fell 6.6%, adding to its losses on Tuesday.

Weak reports have fueled concerns that inflation in the red is squeezing a wide range of companies and could further reduce their profits. They also agree with the Federal Reserve’s increasingly aggressive stance, with President Jerome Powell saying on Tuesday that the bank could consider “moving forward more aggressively” to raise rates if inflation does not fall rapidly.

“Concerns about inflation and a fake Fed are nothing new, but now add concerns about profit margins and the impact of inflation on consumers and you have the recipe for a big day off,” Ryan said. Detrick, chief market strategist at LPL Financial. , in an email.

Retailers had some of the biggest losses. Dollar Tree was down 16.8% and Dollar General was down 11.3%. Best Buy fell 9.3% and Amazon 5.5%. Technology stocks also fell sharply. Apple lost 4.2%. Home goods and grocery stores also fell sharply, with Kroger falling 5.6% and Procter & Gamble 4.4%.

Target’s disappointing report comes a day after the market released an encouraging report from the Commerce Department showing that retail sales rose in April, driven by higher car sales, electronics and more restaurant spending .

“Difficult and uncertain” perspective.

Utility companies held up better than the rest of the market, as investors shifted money to investments that are considered less risky.

For many indicators, the economy remains healthy. Consumer spending, which drives most economic activity, remains strong, unemployment is low and workers have the ability to change jobs. But many economists are concerned that high energy and food prices are holding back growth.

Treasury Secretary Janet Yellen called the global economic outlook “challenging and uncertain” on Wednesday.

“Rising food and energy prices are having inflationary effects, that is, depressing production and spending, and raising inflation around the world,” he told a news conference.

Shares have been struggling to come out of a fall for the past six weeks as worries build up for investors. Trade has been hectic on a daily basis and any data on retailers and consumers is being closely monitored by investors as they try to determine the impact of inflation and whether it will cause a slowdown in spending. Higher-than-expected spending success could indicate slower economic growth ahead.

The Federal Reserve is trying to moderate the impact of the the highest inflation in four decades by raising interest rates. But investors are worried that the central bank could cause a recession if it raises rates too high or too quickly. Concerns persist over global growth as Russian invasion of Ukraine puts even more pressure on oil and food prices as the VOCID-19 blockade on China worsen supply chain problems.

The United Nations is significantly reducing its forecast for global economic growth this year from 4% to 3.1%. The discount is wide, which includes the world’s largest economies such as the United States, China and the European Union.

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