The stock market tumbled early Wednesday and worsened throughout the day as weak retail earnings pointed to consumers who can't afford the rising cost of goods. Target was the latest victim after the retailer missed profit expectations.
The S&P 500 slid 3.4%. The Nasdaq composite dove 4.1% while the Dow Jones Industrial Average lost 3%. The small-cap Russell 2000 fell 3.1%.
Volume fell on the NYSE and Nasdaq compared with the same time on Tuesday.
Meanwhile, housing was also crippled by inflation as input costs hurt housing starts and permits. Housing starts in April totaled 1.724 million, down from a revised 1.728 million in March. Building permits fell to 1.819 million from March's 1.879 million. Economists polled by Econoday had forecast 1.765 million starts and 1.815 million permits.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 31682.28 | -972.31 | -2.98 |
| S&P 500 | (0S&P5) | 3948.83 | -140.02 | -3.42 |
| Nasdaq | (0NDQC ) | 11496.60 | -487.92 | -4.07 |
| Russell 2000 | 176.92 | -5.72 | -3.13 | |
| IBD 50 | 30.27 | -1.13 | -3.60 | |
Last Update: 1:24 PM ET 5/18/2022 |
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"Housing starts fell for the second straight month in April amid a slew of headwinds, including re-intensifying supply chain disruptions, high material costs, and the need for skilled labor," noted BMO Capital Markets economist Priscilla Thiagamoorthy.
The iShares U.S. Home Construction ETF fell 4.7% and remains around January 2021 lows.
KB Home and Builders FirstSource both fell 5%.
Stock Market Hits Retailers' Earnings
The retail sector fell sharply, with the S&P Retail ETF down 4.4%. Target is on track for its worst day since the Black Monday stock market crash on Oct. 19, 1987, when it fell 33%, according to Dow Jones Market Data.
Target sold off 25% in huge volume Wednesday after the company's April-quarter profit fell 41% to $2.19 a share, well below estimates for $3.07 a share. Sales rose 4% to $25.17 billion. Same-store sales climbed 3.3%. Target cited higher freight costs, bigger markdowns and weaker-than-expected sales of bigger-ticket discretionary merchandise.
Target stock had been forming a cup-with-handle base, but today's rout effectively destroys the pattern. Target's plunge followed Walmart's sell-off Tuesday, when the stock slid more than 11% after disappointing quarterly results. Walmart stock fell an additional 6% Wednesday.
Costco Wholesale fell 12% in heavy volume and triggered the 8% sell rule.
Other discount chains also slid. Dollar General and Big Lots both sold off more than 13% in heavy volume. The companies will announce earnings on May 26 and May 27, respectively.
Dollar Tree tumbled more than 20% in major volume. The stock gapped further below its 50-day moving average and is now below the 144.56 buy point of a double-bottom base. It reports earnings May 26.
90% Chance That New Rally Does This After Fierce Sell-Off
TJX Exceeds Profit Expectations, Escapes Downtrend
Lowe's shares fell 6% as revenue and same-store sales fell more than analysts had expected.
The one exception to the downtrend was TJX Cos., which exceeded profit expectations, but missed sales estimates. The company also warned of a decline in sales for the current quarter. Yet, the stock climbed 8%.
Crude oil prices slipped 2.3% Wednesday to $109.77 a barrel. U.S. crude-oil inventories fell last week, down 3.4 million barrels to 420.8 million barrels, according to government data. Analysts surveyed by The Wall Street Journal had predicted crude stockpiles would rise by 1.4 million barrels.
The Innovator IBD 50 ETF fell 3.4% and is on pace to end a four-day win streak. Auto retailer AutoNation, outdoor products maker Vista Outdoor and convenience and gas retailer Murphy USA led the index's fall.
Looking forward, Cisco Systems' product order growth will likely cool off, analysts say, when fiscal third-quarter earnings for CSCO stock are reported late Wednesday. The computer networking giant has reported product order growth of more than 30% for three straight quarters. In the January quarter, product orders jumped 33%.
"We don't forecast orders, but expect deceleration from 30%-plus in the last three quarters," Raymond James analyst Simon Leopold said in a recent note to clients.
Follow Michael Molinski on Twitter @IMmolinski
