US stock markets fall sharply as investors worry about recession
The wild ride on the US stock markets continued on Wednesday with the Dow Jones Industrial Average sinking more than 1,100 points as investors worried about a looming recession.
All of the major US markets fell sharply, with the S&P closing down 4%, its largest fall since June 2020, and the tech-heavy Nasdaq losing 4.7%.
On Tuesday markets had rallied following positive news about consumer spending and signs that China was relaxing its strict Covid-19 lockdowns. Just a day later concerns about an economic slowdown triggered a wide-ranging sell-off.
The sell-off began after Target said supply chain costs and inflationary pressures had cut into its profits and customers were buying fewer higher-margin items such as kitchen appliances, televisions and furniture.
The retailer’s announcement came a day after Walmart said its profit had also been hit by higher costs. The latest news from Target led to a sell-off for retailers including Amazon, BestBuy, Costco and Dollar General.
Investors are increasingly concerned that rising inflation, and the Federal Reserve’s plans to tackle it by sharply hiking interest rates, will trigger a recession.
Target’s management expects inflation to add $1bn to its fuel and freight costs this year and sees little sign of those costs easing throughout 2022. Gas prices topped $4 a gallon in every state this week for the first time.
“Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time,” said Target’s chief executive, Brian Cornell.
The sell-off was broad-based. Tech companies including Apple, Meta and Tesla fell sharply, as did the makers of household
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