Wall Street had another black day this Wednesday, one of the worst since 2020 for the main indices, after a strong rally on Tuesday, after a series of lackluster news in the retail sales sector that raise fears for consumption in the United States. .
The Dow Jones index collapsed 3.57% to 31,490.97 units, while the Nasdaq technology sank 4.73% to 11,418.15 points. The S&P 500 for its part lost 4.04% and was once again below 4,000 points at 3,924.18 units.
The sharp drop in the stock of Target supermarkets (-24.93% to $161.61) – a rare plunge in the retail sales sector – drew all the attention of investors, as it shows that the rise in prices begins to weigh on consumption and company profits.
The firm saw its quarterly profit halve, and its chairman, Brian Cornell, complained about rising costs. He warned that sales would drop in 2023, noting that fuel and freight costs rose.
“Target presented these horrible prospects for results,” commented LBBW’s Karl Haeling. “And then the market sell-off fed back and the more the indices went down, the more the market worried about future results, about operating margins, about recession, and I’m not following…” he added.
People are buying expensive products less and less, and turning to generic products,” said Gregori Volokhine of Meeschaert Financial Services.
“Low-income citizens shop at Walmart; middle-income people are people who shop at Target. So (inflation) is starting to climb the pyramid,” he said.
“The reality is not too good for consumption. You have to be realistic,” he concluded.
After Target, the companies that had the greatest losses on Wall Street were: the self-service chain Costco, which yielded 12.45%; Kohl’s, a retail chain of stores, which fell 11.02%; Best Buy, a specialist in electronics sales that lost almost 11 percent.
All sectors of the S&P 500 went into negative territory.
Big names in tech also fell: Amazon lost 7.16% to $2,142.25, Apple 5.64% to $140.82, and Netflix 7.02% to $177.19.
The Dow Jones and the S&P 500 are at their lowest since March 2021. The Nasdaq is at its November 2020 level.
“Today’s (Wednesday) sell-off is about the ability of companies to pass on higher costs. We were asking the question, and somehow we got the answer with the results” from Target in particular, summed up Quincy Krosby of LPL Financial. .
In Mexico, the S&P/BMV IPC, the main index of the Mexican Stock Exchange, also recorded losses, with a drop at the end of the day of 1,070 points or 2.08%, for a total of 50,394.03 units.
For its part, the FTSE-BIVA, of the Institutional Stock Exchange, lost 2.06% or -21.85 points, to 1041.14 integers.
The companies that had the greatest losses during the day on the BMV were: Grupo Aeroportuario del Pacífico (GAP) with an intraday drop of 6.07%, followed by Banorte, with a drop of 5.13 percent, and Grupo Aeroportuario del Sureste (Asur), which it yielded 4.54 percent.
Banco Regional also lost, with a drop of 3.78%, and Grupo Aeroportuario Centro Norte (OMA), with a loss of 3.33 percent.