Shares fall as more retailers report a hit to profits from inflation.

Stocks fell on Wednesday, ending a short grace period for investors. Wall Street’s focus returns to one of its biggest concerns this year as Target becomes the second large retailer to report inflation is hurting profitability.

The S&P 500 was down 3% by noon, which is a sharp reversal of its recent upside that has lifted the benchmark more than 4% in recent days. The technology-focused Nasdaq Composite fell 3.6%.

Retailers reporting earnings this week led the decline. Target lost 25% to its worst performance in the S&P 500 by Wednesday after it reported that high costs had impacted earnings for the most recent quarter and lowered its earnings forecast for this year.

The warning reflects a similar report from Walmart, which said on Tuesday that Walmart’s earnings were down 25% from a year earlier, and it also put forward a bleak outlook. After falling more than 11% the day before, it was down 7% on Wednesday.

Other retailers also fell sharply. Costco fell 12%. Dollar Tree is down about 17%. Best Buy fell 9.9%.

Retailers are struggling with rising fuel prices since Russia’s invasion of Ukraine, which has resulted in oil prices skyrocketing as a result of imposed or proposed sanctions. Oil was slightly lower on Wednesday at around $110 a barrel, but well above the $78 a barrel it traded at the end of last year.

Both Target and Walmart said sales actually increased slightly as consumers continued to spend despite rising prices across the economy. On Tuesday, the government said US consumer spending continued to rise in April. This alleviated investors’ concerns about the health of the economy, but the optimism did not last long.

Fiona Cincotta, senior financial markets analyst at, said in a memo: “Consumers are surviving the blow to inflation. But retailers are not doing well in 40 years of high inflation.”

Large price movements on Wall Street in recent weeks have been a hallmark of Wall Street trading in recent weeks as investors struggle with the uncertainty of rising prices and the Fed is raising interest rates quickly to combat sharp inflation. Economists are concerned that the economy is at risk of a recession as consumer activity may decrease as borrowing costs rise.

Recent volatility has been seen with the S&P 500 either just above a bear market or falling 20% ​​from its most recent high. The term reflects a constant shift in tone among investors. By Tuesday, the index was about 14% below its January 3 high.

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