May 18 (UPI) — The Dow Jones Industrial Average plunged Wednesday, dropping more than 1,100 points for its biggest drop since 2020.
The index was down 1,164.52, or 3.57% at the end of trading Wednesday over fears of rising costs affecting major retail chains.
The Nasdaq fell further, dropping 4.73%, while the S&P 500 was in the red 4.04%.
The Nasdaq’s drop was its sharpest since May 5.
Wednesday’s decline reverses gains made Tuesday when U.S. markets rallied behind surging tech stocks. The Dow saw a 431.17-point gain Tuesday.
Retail giant Walmart’s shares fell 6.79%, dropping for a second day in a row after it announced Tuesday it would significantly miss its earnings targets. The company blames supply chain issues, a rising cost of labor and the high cost of fuel, among other factors.
Other major retailers are feeling a similar crunch.
Target stock tumbled 24.93% after reporting first-quarter earnings that fell well short of Wall Street’s expectations.
Dollar Tree stock plummeted 14.42%, Dollar General declined 11.11%, Kohl’s slid 10.89%, Macy’s dropped 10.7%, Best Buy fell 10.51%, Amazon dipped 7.16% and Home Depot’s stock fell 5.16% after climbing Tuesday behind better-than-expected earnings data.
The U.S. Federal Reserve continues to signal it will enact further hikes to the base interest rate, in an effort to cool record inflation levels, worrying investors and leading to massive sell-offs.
“I think what investors realized was these seemingly safe haven stocks, the staples like Target, like Walmart, are not immune — that their costs are rising, they cannot pass their higher costs onto their consumers,” Cresset Capital chief investment officer Jack Ablin said in an interview with Yahoo Finance.
“And as Walmart said yesterday, their customers are coming in and buying groceries, but they’re not buying hard goods, they’re not buying other products where they have a slightly higher margin.”