DOW(N) IN THE DUMPS

Worst drop since ’20

The Dow plunged by more than 1,100 points Wednesday, suffering its worst day since 2020, as big retailers reported their profits are being crushed by inflation.

The S&P 500 fell by 4% and the Nasdaq shed nearly 5% as investors reacted to a weak first-quarter earnings report by Target.

The Dow Jones Industrial Average tumbled to 31,490.07 — off 1,164.52 points, or 3.6%, its worst percentage decline since June 11, 2020, and its lowest closing since March 2021.

Target’s first-quarter profit halved, and the company warned of a bigger margin hit on rising fuel and freight costs. Shares fell 25%, their worst day since the Black Monday crash of Oct. 19, 1987.

The retailer’s results come a day after rival Walmart trimmed its profit forecast, blaming persistent supply-chain kinks and higher payroll costs for disappointing margins.

Other retailers incurred some of the biggest losses. Dollar Tree fell 14% and Dollar General slumped 11%. Best Buy fell 11% and Amazon declined 7.2%.

Technology stocks also fell broadly. On the Nasdaq, Apple, Microsoft, Google parent Alphabet, Facebook parent Meta Platforms and Tesla fell between 3.9% and 7% after leading a sharp rebound in the previous session. Rising inflation, the conflict in Ukraine, prolonged supply chain snarls, pandemic-related lockdowns in China and prospects of aggressive policy tightening by central banks have weighed on the markets recently, stoking concerns about a global economic slowdown.

Recession seen

Wells Fargo Investment Institute on Wednesday adjusted its economic expectations to make a mild US recession its base case for the end of 2022 and early 2023.

Federal Reserve Chair Jerome Powell vowed Tuesday that the central bank will raise rates as high as needed to kill a surge in inflation.

Traders are pricing in 50basis-point interest rate hikes by the Fed in June and July.

Investors are concerned that the Fed could cause a recession if it raises rates too high or too quickly.

Worries persist about global growth as Russia’s invasion of Ukraine puts even more pressure on prices for oil and food while lockdowns in China to stem COVID-19 cases worsens supply-chain problems.

The United Nations is significantly lowering its forecast for global economic growth this year from 4% to 3.1%.