Another disappointing earnings report from a leading U.S. retailer on Wednesday reignited fears that rising consumer prices and aggressive Federal Reserve policy could hurt economic growth, sparking a stock sell-off.

The Dow Jones Industrial Average sank 1,164 points, or 3.57%, to 31,490 in response, while the S&P 500 and tech-heavy Nasdaq dropped 4% and 4.7%, respectively.

Target reported a 52% drop in profits in the first quarter as supply chain issues, as well as rising labor and fuel costs, hit home. The retailer also revealed that it saw lower-than-anticipated discretionary merchandise sales in a worrying sign for consumer spending, causing its shares to drop 25%.

The news follows Walmart’s less-than-stellar earnings report on Tuesday, which saw the company notch its worst two-day stock performance since 1987 as it also warned of the negative effects inflation had on consumer spending in the first quarter. CFO Brett Biggs said during the company’s earnings call that customers traded down to cheaper brands and avoided costly purchases of items like new clothing in the quarter.

“The first quarter was one of the most challenging periods yet related to supply chain disruptions, increased costs, and persistently high inflation,” Biggs said. “We weren’t able to fully address or pass along some of the cost increases and that impacted profit more than expected.”

The underperformance from Target and Walmart dragged the whole retail sector down on Wednesday. Shares of Costco and Dillard’s dropped 12.5% and 17.3%, respectively, while the e-commerce retailer Wayfair ended the day down nearly 14%.

“The consumer is challenged,” Megan Horneman, chief investment officer at Verdence Capital Advisors told CNBC. “We started to see at the end of the year that consumers were turning to credit cards to pay for the rise in food prices, rise in energy prices, and that’s actually gotten much worse.”

Mega cap companies like Amazon and Apple also experienced sell-offs on Wednesday, with shares falling 7.2% and 5.6%, respectively. Crypto markets weren’t immune either, with Bitcoin falling 4% to around $29,000 per coin while the total cryptocurrency market cap fell to 3% to $1.25 trillion.

Federal Reserve policy continues to be a thorn in the side of investors this week. Fed Chair Jerome Powell said at The Wall Street Journal’s The Future of Everything Festival on Tuesday that he would need to see “clear and convincing” evidence that inflation is falling from its nearly four-decade high before he would consider pausing interest rates hikes.

Concerns over global economic growth also took a toll on markets on Wednesday after the U.N. slashed its global growth forecast from 4% to 3.1% for this year.

“We are pricing in a growth scare,” Lori Calvasina at RBC Capital Markets told Bloomberg. “The market is trying to find a bottom here. There is a lot of uncertainty in this market right now about whether or not that recession is going to come.”

Source: https://fortune.com/2022/05/18/dow-falls-1164-points-retailers-earnings-miss-target-walmart-stocks/

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Stocks sank in morning trading on Wall Street Monday, putting the benchmark S&P 500 on track for what the market considers a correction — a drop of 10% or more from its most recent high.

The S&P 500 fell 2.5% to 4,287.22 as of 10:15 a.m. ET, and is now down about 10.7% from the high it set on Jan. 4. A close of 4,316.90 or lower will put it into a correction.

The declines in the market extend a recent run of losses that have left major indexes in a January slump. The Dow Jones Industrial Average fell 712 points, or 2.1%, to 33,544 and the Nasdaq fell 3%.

Investors have been growing increasingly worried about how aggressively the Federal Reserve, which holds a policy meeting this week, might act to cool rising inflation. Wall Street anticipates the first increase in interest rates as early as March, and investors have grown increasingly concerned the Fed will have to raise rates more quickly and more often than the central bank originally indicated.

The Fed’s benchmark short-term interest rate is currently in a range of 0% to 0.25%. Investors now see a nearly 70% chance that the Fed will raise the rate by at least one percentage point by the end of the year, according to CME Group’s Fed Watch tool.

Inflation is putting pressure on businesses and consumers as demand for goods continues to outpace supplies. Companies have been warning that supply chain problems and rising raw materials costs could crimp their finances. Retailers, food producers and others have been raising prices on goods to try to offset the impact.

Wall Street also has several key economic reports to look forward to this week. Investors will get more data on how consumers feel with the release on Tuesday of The Conference Board’s Consumer Confidence Index for January. The Commerce Department releases its report on fourth-quarter gross domestic product on Thursday and its report on personal income and spending for December on Friday.

Additional reporting by The Associated Press.

Source: https://www.newsy.com/stories/stock-market-tumbles-as-fed-eyes-interest-rate-hikes/

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U.S. equity markets surged Monday as Wall Street rebounded from its worst week since the financial crisis and has President Trump and U.S. health officials made more progress in developing a plan to combat the coronavirus.

The Dow Jones Industrial Average rose over 1,294 points or 5 percent in what is the biggest point gain ever. Ditto for the S&P 500 and Nasdaq from a point gain of 136 and 384 points respectively.

The rally comes after a volatile overnight session saw Dow futures swing by more than 1,100 points and the U.S. 10-year yield sink to a record low 1.03 percent.

Last week, the Dow Jones Industrial Average tumbled more than 3,500 amid coronavirus fears. Both the Dow and S&P 500 are trying to avoid an eighth straight day of losses, something that hasn’t happened since the Friday before the 2016 election.

Looking at stocks, consumer goods names rallied amid signs consumers were hoarding goods just in case the outbreak causes lengthy home quarantines.

Meanwhile, Co-Diagnostics soared after announcing plans to provide coronavirus test kits to U.S. labs.

Apple shares gained after Oppenheimer said the company’s “products and services will prove more resilient than competitive products in uncertain times” and upgraded shares to “outperform.”

General Electric was little changed after J.P. Morgan Chase upgraded shares to “neutral” and raised its price target to $8 from $5. On Sunday, former GE CEO Jack Welch died at the age of 84.

Meanwhile, airlines were mostly lower after more signs the outbreak will take a toll on business. American Airlines and Delta Air Lines announced the cancellation of service to and from Milan through late April and United Airlines CEO Oscar Munoz said the airline would “likely” need to cut more flights from its schedule.

Casino operators Wynn Resorts and MGM International fell after Macao, the gaming capital of the world, reporting gross gaming revenue plunged by a record 87.8 percent year over year to 3.1 billion patacas ($386.5 million) in February.

Cruise operators Carnival Corp., Royal Caribbean, and Norwegian Cruise Line slid following the news Japanese operator Luminous Cruise filed for bankruptcy amid a slew of cancellations caused by the outbreak.

Commodities were sharply higher with West Texas Intermediate crude oil up 4.5 percent to $46.75 a barrel and gold climbing by 1.8 percent to $1,592.30 an ounce.

European markets were mixed with Britain’s FTSE up 1.1 percent France’s CAC higher by 0.4 percent. Germany’s DAX was down by 0.3 percent.

Overnight, a monthly purchasing managers’ index released Monday by Caixin magazine showed Chinese factory activity fell to 40.3 in February from 51.1 in January as the outbreak forced the temporary closure of facilities around much of the country. A separate report released Saturday by China’s National Bureau of Statistics showed a plunge to 35.7 from 50. Still, business confidence rose to a five-year high amid hopes Beijing would provide stimulus to cushion the economy.

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Markets rallied across Asia as China’s Shanghai Composite surged 3.2 percent, Japan’s Nikkei jumped 1 percent and Hong Kong’s Hang Seng added 0.6 percent.

Source: https://www.foxbusiness.com/markets/us-stocks-march-2-2020

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The blue-chip Dow Jones Industrial Average had its steepest drop on Christmas Eve in its 122-year history. It also was the worst Christmas Eve for the tech-heavy Nasdaq Composite and the first time the broader S&P 500 ever had more than a 1 percent drop on Dec. 24. The loss for the S&P 500 put the index into bear market, where it joined the Nasdaq.

If the markets had not closed at 1 p.m. ET for the holiday, the damage might have been worse.

A trifecta of concerns drove investors to sell: The prospect of rising interest rates; global economic weakness; and the likelihood that the partial government shutdown will extend into next year.

Congress missed a midnight Friday deadline for getting a spending bill passed, resulting in a partial government shutdown. No votes are scheduled to end the stalemate until after Christmas.

Monday’s hammering followed a stomach-churning week, when the Dow lost 6.9 percent and the S&P 500 tumbled 7.1 percent. The Nasdaq gave up 8.4 percent, making it the first of the three major averages to fall into bear market territory.

Concerns about the ability of the markets to handle the sell-off promoted Treasury Secretary Steven Mnuchin late Sunday to contact the CEOs of the nation’s six largest banks and convene a meeting of the President’s Working Group on Financial Markets. That group, which includes officials in the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission, met to ensure the financial system had adequate liquidity to handle all the selling.

Mnuchin “confirmed that they have not experienced any clearance or margin issues and that the markets continue to function properly,” the Treasury Department said in a statement.

The day’s downdraft hammered crude oil prices: West Texas Intermediate, the benchmark U.S. crude oil, tumbled 6.7 percent to $42.53 per barrel.

The only shred of good news Monday came when China said it plans to remove import and export tariffs in 2019 on a range of goods, including import taxes on alternative meals used in animal feed, to secure supplies of raw materials amid trade tensions with the United States and boosting outbound cargoes.

In Monday’s Asian trading, China’s Shanghai Composite ended the day up 0.4 percent.

Hong Kong’s Hang Seng index dropped 0.4 percent.

And Japan’s markets were closed.

In Europe trading, London’s FTSE was down 0.5 percent, France’s CAC traded down 1.5 percent.  Germany’s markets were closed for Christmas Eve.

On Friday, stocks ended a choppy session sharply lower with the Nasdaq Composite in bear market territory.

The tech-heavy index lost 3 percent, or more than 195 points, the Dow Jones Industrials fell over 414 points, or nearly 2 percent, while the S&P shed 2 percent plus, ending the week with a third down session.

Amid the selling, investors did get decent economic data on Friday. Third-quarter gross domestic product came in at 3.4 percent in a third update released on Friday, in line with analyst expectations and slightly lower than the first reading of 3.5 percent, according to the Commerce Department.

FOX Business’ Ken Martin contributed to this story.

Source: https://www.foxbusiness.com/markets/dow-plunges-650-points-in-worst-christmas-eve-trading-session-ever

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