Dow plunges 1,100 points after targeted implosion

  • U.S. stocks plunged on Wednesday after a surprise profit failure at Target shocked investors.
  • The target stock fell 25% after the company said rising fuel, freight and other input costs were hurting profit margins.
  • Although Target said profit margins are tightening due to inflationary pressures, it believes the consumer remains on solid footing.

The Dow Jones plunged more than 1,100 points on Wednesday as investors weighed the implications of a surprise Target shortfall.

The Target stock plunged as much as 27% in Wednesday’s trades after the retailer reported earnings below expectations. The retailer cited soaring fuel and freight costs as weighing on profitability, and expects at least $1 billion to hit its bottom line this year.

Target said its 5.3% operating margin “was well below expectations,” reflecting its work to reduce excess inventory as well as rising freight and transportation costs. Its operating margin was 9.8% in the same quarter in 2021.

Target’s stock implosion follows Walmart’s poor earnings release on Tuesday, which sent its shares tumbling more than 11%. While Walmart and Target said a mix of low-selling inventory and higher input costs weighed on profitability, they both said the consumer remains on solid footing from their perspective.

But investors are now pointing to the big shortfall for retailers as yet another sign that an economy


recession

is imminent.

Here’s where the U.S. indices stood at 1:58 p.m. ET on Wednesday:

The United States has proposed tariffs on Russian oil to limit rising energy prices from the potential EU ban as it talks with European allies. The tariff would come into force before the European Union imposes a total ban on Russian oil by the end of this year.

Russia is closing in on a potential sovereign debt default for the first time in nearly 100 years, according to a new report.

The Kremlin is likely to default 90% within a year, according to ICE Data Services, which tracks debt insurance intended to protect investors. The odds that Russia will miss more payments rose on Wednesday as investors weigh the likelihood of the Biden administration blocking bond payments to U.S. creditors.

The Wells Fargo CEO said there was “no question” of an economic slowdown in the United States and that a recession seemed hard to avoid. Speaking to the Wall Street Journal’s “Future of Everything Festival” on Tuesday, Charlie Scharf said: “It’s going to be hard to avoid some kind of recession.”

Consumer prices across the UK economy rose the most in 40 years in April, as rising energy and food bills deepened a cost of living crisis that threatens to plunge the country into recession. recession later this year. Year-on-year consumer price index inflation hit 9% in April, the Office for National Statistics said on Wednesday, up from 7% in March.

West Texas Intermediate crude oil fell 5.20% to $106.55 a barrel. Brent, the international oil benchmark, fell 2.88% to $108.71.

Bitcoin fell 2.94% to $28,942. Ether prices fell 4.02% to $1,956.

Gold fell 0.37% to $1,811.20 an ounce. The 10-year Treasury yield fell 8 basis points to 2.89%.

James T. Quintero