The S&P 500 fell on Wednesday as investors weighed in on a grim holiday quarter update from Target that pressured retail stocks.
The broad stock index was last down 0.7% and the Nasdaq Composite lost 1.3%, while the Dow Jones Industrial Average struggled with the flatline.
The moves came after Target reported slumping sales as families face high inflation ahead of the biggest shopping season of the year for retailers. The warning weighed on stocks, sending Target down more than 15% and on pace for its worst day since May. Advanced Auto Parts and Target fell by double digit percentages. Macy’s, Kohl’s, Nordstrom and Gap were also down.
“A volatile retail earnings season is forcing investors to be picky and particular about their retail exposure as the gap between big-box retail and specialty retail continues to widen” , said the founder and CEO of KKM Financial.
Brian Levitt, global market strategist at Invesco, called it a mixed picture, noting that retail data released earlier in the day contradicted the target warning.
“Retail sales data suggests consumers are ready to spend, especially on big-ticket items, while retail guide Target warned of a weaker holiday season,” it said. -he declares. “The latter is more in line with our expectations. Tighter monetary policy is designed to make people feel less affluent. The idea is to slow consumption, allowing inflation to moderate. Ironically, this will also prepare the ground for a recovery.”
Stocks had a strong run after last week’s better-than-expected Consumer Price Index report. The S&P 500 posted its best weekly streak since June last week and all major averages are on track to end the month with gains.
Some investors say, however, that a short-term pullback is on the horizon.
“In the short term, the market is very broad and overdue to pull back and digest the recent rally,” said Adam Sarhan, CEO of 50 Park Investments.