- The stock market needed a positive wheel to confirm the change in trend. However, stocks plummeted sharply.
- Investors closely watched quarterly results from various retailers including Target and Walmart, which indicated a major increase in costs. Both companies fell more than 10%.
- The main indexes erased the good gains of Tuesday and fell on Wednesday: The Nasdaq -3.5%, the Dow Jones -2.5% and the S&P 500 -3%.
- Investors had taken as positive the words of the president of the Fed, Jerome Powell, who indicated that he will do everything possible to lower inflation to a target of 2%.
Black Wednesday for Wall Street. Stocks slumped after investors eyed quarterly results from retailers including Walmart and Target, which showed disappointing numbers and also revealed concerns about rising food and other items.
The stock market, which continues with a downward trend, needed a positive round to change course. However, and after a good rise in the indices on Tuesday, this Wednesday they sink.
The Nasdaq fell 3.5%, the Dow Jones 2.5% and the S&P 500 3%. So far this year, losses accumulate 26%, 12.3% and 16.6%, respectively.
Target‘s earnings report disappointed, missing Wall Street estimates, with the company’s shares down more than 25%. The company argued for higher fuel and compensation costs.
Something similar happened Tuesday with Walmart, which cited higher fuel costs and also higher labor costs. Shares plunged more than 11% in the biggest one-day drop since 1987. They were down another 7% on Wednesday.
“The consumer is challenged. We started to see at the end of the year that consumers were turning to credit cards to pay for rising food prices, rising energy prices, and that’s actually gotten a lot worse. This is going to hurt those leading retail places and Walmart tends to be one of them.”
Megan Horneman, chief investment officer at Verdence Capital Advisors.
Other retailers that were also affected were Best Buy, Macy’s and Kohl’s, with their titles falling more than 10%.
“Any business that relies on households and discretionary purchases will likely suffer this quarter because a lot of discretionary income has been funneled into food and energy prices.”
Jack Ablin, founding partner of Cresset Capital.
Yesterday, Jerome Powell spoke publicly and confirmed his main objective of lowering inflation, maintaining a strong labor market and avoiding a recession. In addition, his policies are gaining confidence among investors.
