Losses on Wall Street deepen, Dow down 2.3%, Nasdaq 3%

NEW YORK – Wall Street stocks were back in the red on Wednesday (May 18), with poor results from retailer Target underscoring worries about corporate profits as companies navigate an inflationary environment.

After Tuesday’s rally, all three major indices were decisively negative near midday, with the Dow Jones Industrial Average down 2.3 per cent at 31,920.99.

The broad-based S&P 500 fell 2.6 per cent to 3,981.19, while the tech-rich Nasdaq Composite Index slumped 3 per cent to 11,625.08.

Target, the North American-focused big-box retailer, plunged around 25 per cent after earnings missed expectations despite higher sales.

The company pointed to the hit from higher operating costs in results that echoed those of bigger rival Walmart, which had an ugly on Tuesday after also citing profit pressures.

Earnings at Target “collapsed” in the quarter, said Neil Saunders, analyst at GlobalData.

“One of the factors behind the profit decline is a shift away from discretionary to non-discretionary categories like food and household goods,” Saunders said in a note. “The latter are lower margin and this change in the sales mix negatively impacts profits.”

The weak results come in a market already buffeted by recession fears as the Federal Reserve raises interest rates to counter inflation.

Among other companies reporting results, home-improvement retailer Lowe’s sank 5.2 per cent, while the discount company TJX gained 9 per cent.

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