Stocks in Steep Plunge as Target's Woes Renew Inflation Fears

Stocks closed sharply lower on Wall Street Wednesday as dismal results from Target renewed fears that inflation is battering U.S. companies. The S&P 500, the benchmark for many index funds, fell 4%.

Target lost a quarter of its value, dragging other retailers down with it, after saying its profit fell by half in the latest quarter as costs for freight and transportation spiked.

That comes a day after Walmart cited inflation for its own weak results. The Dow Jones Industrial Average dropped 1,164 points, or 3.6% and the tech-heavy Nasaq pulled back 4.7%.

Treasury yields fell as investors sought safer ground.

The benchmark S&P index is now down more than 18% from the record high it reached at the beginning of the year.

That's just shy of the 20% decline that's considered a bear market.

The Dow was down 1,143 points, or 3.5%, at 31,502, and the Nasdaq fell 4.6%.

“A lot of people are trying to guess the bottom,” said Sam Stovall, chief investment strategist at CFRA. “Bottoms occur when there’s nobody left to sell.”

Retailers were among the biggest decliners after Target plunged following a grim quarterly earnings report.

Target lost a quarter of its value after reporting earnings that fell far short of analysts’ forecasts. In a sign of the impact of inflation, particularly on shipping costs, Target said its operating margin for the first quarter was 5.3%. It had been expecting 8% or higher. The company also said consumers returned to more normal spending habits, switching away from TVs and appliances and buying more toys and travel-related items.