On Wednesday, the Dow Jones Industrial Average recorded its biggest plunge since 2020 after another prominent retail company warned of escalating prices, reinforcing investors’ apprehensions about future inflation, and triggering the catastrophic 2022 sell-off. The Dow lost 1,164.52 points, or 3.57%, to 31,490.07, the index’s steepest slide since June 2020. It was the most disappointing Dow performance since March 2021.
Meanwhile, the S&P 500 closed 4.04% lower at 3,923.68, marking the most severe fall since June 2020. The Nasdaq Composite is down 4.73% to 11,418.15, which is the steepest downturn in the tech-heavy index since May 5. The shedding was extensive and pronounced on Wall Street with just eight members of the S&P 500 in the green.
Investors fear rising inflation is eating into corporate profits and consumer demand in the wake of Target and Walmart’s back-to-back quarterly earnings reports. Five times this year, the Dow has declined by more than 800 points as the stock market sell-off intensified within the last month. Target’s first-quarter earnings were lower than Wall Street estimates due to higher fuel and compensation costs. Target shares fell 24.9% Wednesday. This resulted in lower sales of discretionary items like TVs.
Walmart also posted earnings that fell short of expectations due to higher fuel and labor costs on Tuesday. Walmart shares ended the day down 11%. On Wednesday, the market fell 6.8% more. Other retailers suffered a blow on the back of Target’s quarterly earnings shortfall, with the SPDR S&P Retail ETF dropping 8.3%. Amazon’s stock price plummeted 7.2%, and Best Buy’s stock price decreased 10.5%. Dollar General’s dropped 11.1%, and Dollar Tree’s tumbled 14.4%. Shares of Macy’s slid 10.7%, while shares of Kohl’s plunged 11%. Lowe’s dropped 5.3% after underperforming sales expectations in its first quarter report as consumers bought fewer supplies for outdoor projects.
The yield on the benchmark 10-year Treasury note has fallen below 2.9% after initially topping 3% on Wednesday morning as investors gravitated back into bonds as a dependable alternative. The Dow has slumped for seven consecutive weeks, but stocks had rallied over the previous three trading sessions. Last week, the S&P 500 sank to the threshold of a bear market or 20% below its record high. After Wednesday’s tumble, the S&P 500 now lies 18.6% below its nadir and is off 17.7% for 2020.