‘Fall’ on the Wall: Dow ‘plunge’ 1,100 points, drop over 4% for Nasdaq

Wall Street stocks closed higher on Wednesday, as Target and Wallmart disappointing results and warnings of rising costs reinforce fears of inflation, which has led the market to heavy losses so far.

In particular, o Dow Jones recorded a “dive” of 1,164.52 units or 3.57% to 31,490.07 units while the S&P 500 fell by 161.37 points or 3.95% to 3,927.48 points. In the meantime, the Nasdaq slipped by 566.37 points or 4.73% to 11,418.15 points.

It should be noted that this is the fifth drop of the Dow over 800 units this year, which occurred as the sell-off intensified in the last month, according to FactSet data.

The S&P 500 recorded the biggest daily drop since June 2020, according to Dow Jones Market Data.

Of the 30 Dow shares, all closed in “red”. The shares of Walgreens Boots Alliance, Coca – Cola and Wallmart led the losses with losses of 8.39%, 6.95% and 6.84% respectively.

The losses at Wall came after its disappointing corporate results Target, whose quarterly earnings were cut in half and were much lower than Wall Street estimates due to higher fuel and transportation costs. The company’s share plunged more than 24%.

Target’s announcement came a day after Walmart’s announcement, which was also lower than expected, as it spoke of higher fuel and labor costs.

“Any company based on households and purchases of non-essential goods is likely to suffer this quarter, as much of the revenue goes to food and energy,” said Jack Ablin, a senior Cresset Capital executive.

“It’s clear that transportation costs matter and affect some of the biggest companies,” said Kim Forrest, founder of Bokeh Capital.

Other companies also came under pressure due to Target’s worse-than-expected results. In particular, the SPDR S&P Retail ETF fell more than 8% while the share of Best Buy slipped more than 10%. At the same time, Dollar General lost more than 11%.

Also, from the retail sector, Macy’s and Kohl’s shares are over 10% respectively.

Lowe’s fell more than 5% after first-quarter sales estimates fell as buyers bought fewer commissions for outdoor projects.

The Dow has been falling for seven consecutive weeks, but shares have stabilized in the last three sessions. Last week, the S&P 500 fell to the brink of a bear market – or 20% below its record high – but the index has now gained 4% since closing Thursday.

Despite the recent recovery, the S&P 500 is down 14% for the year, while the Nasdaq has lost 23% so far.

Gas prices are rising steadily, contributing to inflationary pressures across the economy. The national average for a gallon of gasoline reached a record $ 4,567 on Wednesday, according to the AAA. Prices are 48 cents higher than a month ago and $ 1.52 higher than what consumers paid last year.

Each state now averages over $ 4 per gallon, with some states costing even more. In California, the state average has exceeded $ 6.

Shares and other risky assets have come under pressure from inflation and the US Federal Reserve (Fed) trying to curb price increases through interest rate hikes, which has led to concerns about a possible recession. Fed Chairman Jerome Powell said on Tuesday that “there will be no hesitation” about raising interest rates until inflation is brought under control.

However, some recent economic data, including the jobs report and the April retail sales data, still show that the US economy is growing.

Meanwhile, US Treasury Secretary Janet Yellen warned on Wednesday that Russia’s invasion of Ukraine had caused food and energy prices to rise sharply, slowing economic growth and creating a greater risk of global stagflation.

“This is an environment full of risks, both in terms of inflation and possible growth slowdowns,” Glenn told a news conference ahead of this week’s G7 finance ministers’ meeting.

“The global economic outlook is uncertain,” she said.

Stagnant inflation occurs when inflation and unemployment are high and economic output is low.

Glenn also noted that the US is in a better position to meet this economic challenge due to its strong labor market, but said food shortages are a worldwide threat that needs to be addressed.

At the macro of the dayUS housing construction began to decline in April, while building permits plunged, confirming concerns that rising mortgage rates would slow construction in the coming months.

In particular, home declines fell 0.2% to a seasonally adjusted annual size of 1.724 million units, according to the country’s Ministry of Commerce. Analysts’ average estimates in a Reuters poll put the starts at 1.765 million units.

The March figures were revised lower at 1.728 million units from the original 1.793 million units.

At the same time, building permits fell 3.2% to 1.819 million units.