The S&P 500 fell on Wednesday as investors weighed a gloomy holiday quarter update from Target that pressured retail stocks.
The broad market index was last down by 0.4% and the Nasdaq Composite shed 1.1%, while the Dow Jones Industrial Average wrestled with the flat line.
Those moves came after Target reported a decline in sales as families deal with high inflation heading into the biggest shopping season of the year for retailers. The warning weighed on stocks, sending Target down more than 15% and on pace for its worst day since May. Advanced Auto Parts and Target tumbled by double digit percentages. Macy’s, Kohl’s, Nordstrom and Gap were also down big.
“A volatile earnings season for retail is forcing investors to be picky and particular on their retail exposure as the gap between big box retail and specialty retail continues to widen,” said founder and CEO of KKM Financial.
Wall Street is coming off a positive session, with the S&P 500 closing up 0.87% on Tuesday and the Dow adding 56.22 points, or 0.17%. The Nasdaq jumped 1.45% and is the only major average on pace to eke out slight gains for the week. The producer price index report, which measures wholesale prices, came in below expectations, which alleviated some of investors’ concerns around inflation.
Stocks have staged a solid run following last week’s better-than-feared consumer price index report. The S&P 500 last week posted its best weekly stretch since June and all the major averages are on track to finish the month with gains.
Some investors say a near-term retreat is on the horizon, however.
“In the short term, the market is very extended and overdue to pull back and digest the recent rally,” said Adam Sarhan, CEO of 50 Park Investments.
