US Stocks Endures Disaster Day Since 2020 – Fears Intensify
The Dow Jones Industrial Average and the broader S&P 500 suffered the worst losses since June 2020. Investors panic that a sharp rise in inflation will lead to a recession in the world’s largest economy. The Dow fell 3.6% on Wednesday. The S&P fell 4% after retailers released disappointing financial results.
Shares of Target, one of the largest retailers in the U.S., dropped 26 percent at one point; After the company pointed to rising spending pressures, which sparked investor fears around inflation. The company’s quarterly results also severely missed analysts’ expectations. This has led to a stock price crash of the worst since 1987.
Shares of Dollar General, Dollar Tree, and Costco Wholesale also fell sharply. Since Tuesday, sales had changed when markets recovered after a strong index of crucial technology stocks. Shares helped the U.S. stock market recover from the shock of the early COVID pandemic shock.
However, the 40-year high level of U.S. inflation has alarmed investors and hurt them; The so-called growth stocks are so high that the Nasdaq entered the correction area in January. It then continues to suffer losses.
Wednesday fell 4.7% – the second-worst day of the year – with Apple dropping more than 5%. Inflation affects all aspects of a profit account, be it transport or disruption of the supply chain. On Thursday, sales spread to Asian trade, with both the Nikkei and Hang Seng down about 3%. The opening of the FTSE 100 was below 0.5%.
Stocks and Firms
Walmart and Target, the country’s two largest retailers, confirmed that the anti-inflation wind is getting stronger this week. Analysts estimate that the strength of the customer will be tested as the pressure on Walmart and Target’s signal price increases does not diminish. On Wednesday, target stocks fell the most by 25% since 1987. This helped the Dow swim to 1164.52 points. This pushes the benchmark to its lowest level since March 2021.
According to the CEO of Target, the challenge of growth was unusually high costs, Resulting in profitability being much lower than expected. Adjusted earnings fell 40.7% year-on-year, Up to $2.10 per share.
The Dow Jones Market Data Group observed that the S&P 500 remains at its lowest level since March 2021. The shares of Walmart fell 11% the day before, also the worst day since 1987. On the food side, there is double-digit inflation, and growth may continue. Adjusted earnings fell 23% to $1.30 per share. Gross consumer inflation reached 8.3% in April. This is a maximum of 40 years. Food and fuel costs are even higher. According to the Consumer Price Index of the Bureau of Labor Statistics, the price of unleaded gas increases by 44% annually, milk by 14.7%, and eggs by 22.6%.
Inflation and Recession
Increasing costs and reducing consumer spending, which accounts for about 70% of the U.S. economy, could intensify the U.S. recession. It is worth noting that the U.S. economy shrank remarkably by 1.4% in the first quarter. Currently, second-quarter economic growth estimates remain at 2.4%.
European stocks fell on Thursday as sharp sell-offs in U.S. stocks raised concerns about an economic slowdown and further reduced demand for risky assets. The Stoxx Europe 600 index has fallen 1.1% since then, Which is why the U.S. S&P 500 saw its most significant drop in nearly two years. Technology was the biggest decline among sectors, followed by retail. Tech and growth stocks were particularly vulnerable to rising interest rates amid recent sales.
Strategists generally expect global stocks to fall to a new mark, despite an $11 trillion drop in the MSCI All Country World Index since late March; However, they said the fear of imminent recession was exaggerated. In Europe, the Stoxx 600 will finish December with 476 index points, which is 2.5% less than during the year. Although this represents an increase of about 8% compared to the closing on Tuesday, Strategists have reduced their ratings by five index points in the last month.
