4:13pm: A sea of red on Wall Street
The Dow endured its worst day since October 2020, dropping 1,161 points, 3.6%, to 31,594. The Nasdaq plunged 566 points, 4.7%, to 11,418, and the S&P 500 165 points, 4%, to 3,924. The losses were so widespread that just 13 of the S&P 500 components ended the day above water.
Among the hardest hit was Target Corporation (NYSE:TGT), shares of which sank 25% to $161.73 after the retail giant's quarterly adjusted earnings per share of $2.19 badly missed Street projections of $3.07. Target pinned the miss on rising costs for fuel and compensation.
Meanwhile, Walmart Inc (NYSE:WMT), which missed earnings expectations of its own on Tuesday and had its share price drop 11%, saw its stock bleed another 6.8% Wednesday to $122.36.
12:05pm: US stocks continue to slide at noon
US stocks continued to drop at midday as off the back of mixed retail earnings and comments from Fed chair Jerome Powell reiterating the central bank’s plans to hike interest rates over the coming months to curb inflation.
At noon, the Nasdaq was leading the decline, having shed about 401 points or 3.3% at 11,584 points.
The Dow was down 786 points or 2.4% at 31,869 points and the S&P 500 had dipped 118 points or 2.9% at 3,971 points.
Shares of retail giant Target Corporation (NYSE:TGT) have plummeted about 25% at noon following the release of its quarterly earnings which revealed the impact of supply chain challenges, increased fuel costs, and lower than expected sales of discretionary merchandise on the company’s profits.
The company reported earnings per share of $2.19 adjusted, well below the consensus analyst expectation of $3.07 per share.
IG chief market analyst Chris Beauchamp said growth fears were back after a brief hiatus, driving equities and oil prices lower.
“That stocks can’t even manage a decent rebound after their heavy losses should tell investors that we are not in the bull market of 2021 anymore,” Beauchamp said.
“Investors seem to have taken counsel of their fears once again, fretting about inflation and a recession in parts of the global economy.”
“While it was expected that this bounce would be short-lived, the rapidity with which it has unravelled will mean that even more investors will start heading for the exits.”
He noted that one positive from these recession fears was the way they have managed to cap oil’s gains.
“If key parts of the global economy do slip into negative growth, then demand for oil is unlikely to hold up,” Beauchamp said.
“While that is of little comfort to hard-pressed consumers, it does at least offer the chance of some relief from higher inflation in the medium term.”
11.10am: Proactive North America headlines:
Reunion Gold lists on the OTCQB Venture Market to bring greater visibility and convenience to US investors
South Star Battery Metals announces groundbreaking ceremony for start of Phase 1 construction of the Santa Cruz Graphite Mine
Avalon GloboCare to team up with Lu Daopei Hematology Institute to develop companion diagnostics for CAR-T cancer treatments
Globex Mining Enterprises says deep drilling by its partner Starr Peak Mining at its NewMétal property returned economic intervals of copper and zinc
Goldseek Resources says drilling at Beschefer project in Quebec continues to outline strong continuity and expansion potential
Royal Fox Gold (TSX-V:FOXG) releases new round of drill results showing meaningful gold grades at its Philbert gold project
BioVaxys confirms first clinical site for Phase I ovarian cancer vaccine trial in France
Global Energy Metals says initial drilling at its Millennium cobalt, copper, and gold project in Queensland indicates potential for resource expansion
Hillcrest Energy Technologies (CSE:HEAT, OTCQB:HLRTF) adds experienced tech CEO to its board
Prospector Metals kicks off maiden drilling program at Toogood gold project in Newfoundland
AIM ImmunoTech to file Investigational New Drug application for Ampligen to treat long COVID
American Resources signs offtake and financial partnership to start Carnegie 2 mine
Talon Metals releases record-length nickel-copper intercept from Tamarack resource area
Jushi Holdings subsidiary Campbell Hill Ventures awarded provisional medical marijuana dispensary license in Ohio
Medallion Resources says ACDC Metals is progressing toward IPO on ASX
Lion Copper and Gold says Rio Tinto to provide $3.5M funding for Mason Valley development after companies reach agreement on work program
DGTL Holdings subsidiary Hashoff extends social media marketing campaign with Nasdaq-listed e-sports gaming client
Arrow Exploration ‘encouraged’ by results from well testing at Rio Cravo Este-2 well in Colombia
Graphene Manufacturing Group to collaborate with Rio Tinto on energy saving and storage solutions
Group Eleven Resources appoints Jeannine Webb as CFO
9:40am: US stocks slip at the open
US stocks opened lower on Wednesday morning as concerns over inflation and higher interest rates continue to crush investor confidence.
Just after the open, the Dow had shed 33 points or 1% at 32,321 points.
The S&P 500 had slipped 50 points or 1.2% to 4,039 points and the Nasdaq had lost 183 points or 1.5% at 11,802 points.
OANDA senior market analyst Craig Erlam said it may be time for investors to buckle up and prepare for a very bumpy year.
“There are the gloomy forecasts from central banks, with even the Fed now targeting a softish landing which feels very much like the stage before a mild recession,” Erlam said.
6.30am: Stocks seen retreating
US markets were expected to open lower on Wednesday as concerns over inflation and higher interest rates continue apace, suggesting that the volatility seen over the past few weeks is not going to fade.
Recent US economic data show that consumption remains strong despite the prospect of higher interest rates, signaling that the US Fed will continue on a path of aggressive interest rate hikes, weighing on sentiment.
Futures for the Dow Jones Industrial Average fell 0.1 in pre-market trading, while those for the broader S&P 500 index shed 0.2% and the Nasdaq lost 0.4%.
“US retail sales grew more than 8% on yearly basis in April, more than around 7.30% printed a month earlier, meaning that Americans continue spending despite tighter economic conditions,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “Unfortunately, the resilience of spending means that the Federal Reserve’s (Fed) actions don’t result in the desired cooling effect on inflation.”
She noted that price pressures are mostly due to rises in the supply side, mainly from soaring energy and food prices while monetary policy is intended to control demand.
“If demand doesn’t ease fast enough, the Fed must tighten faster,” she added.
Investors are worried that the Fed may consider hiking rates even more quickly, in moves that might crimp economic growth and threaten corporate bottom lines.
So far this year, the Fed has already raised interest rates by a total of three-quarters of a percentage point in efforts to stamp out inflation which is at its highest level in decades.
Elsewhere, oil prices were higher, indicating that commodity price pressures are not letting up, partly due to Russia's invasion of Ukraine. WTI crude oil futures were up 1.25% at $113.80 a barrel while Brent crude futures increased 1% to $113.02.
“Crude oil spiked above the $115 per barrel, but bumped into top sellers above this level. Solid support approaching the $120 mark will likely be hard to clear, as the rising energy prices have a curbing effect on demand at the actual levels, and automatically cool down the rally,” Ozkardeskaya said.
Contact the author at jon.hopkins@proactiveinvestors.com