Target, Other Retailers Weigh Down Markets

Target drops 13.1% after dismal financial report
By Newser Editors and Wire Services
Posted Nov 16, 2022 3:52 PM CST
Target, Other Retailers Weigh Down Markets
Target says sales have slowed sharply in recent weeks.   (AP Photo/Charles Krupa, File)

Wall Street closed lower on Wednesay as hefty drops in retailers and technology companies offset gains elsewhere in the market. The S&P 500 fell 32.94 points, or 0.8%, to 3,958.79. The Dow Jones Industrial Average fell 39.09 points, or 0.1%, to 33,553.83. The Nasdaq fell 174.75 points, or 1.5%, to 11,183.66. Target fell 13.1% after delivering a dismal financial report, with a surprisingly big drop in its third-quarter profits, the AP reports. Target also cut its forecasts for the holiday season and said its sales slowed sharply in recent weeks. The government reported that retail sales rose overall last month, but it’s unclear how much of that strength is due to increased purchases versus higher prices.

Auto parts retailer Advance Auto Parts fell 15% after reporting weak financial results. Macy's, which reports its financial results on Thursday, fell 8.1%. Big technology companies also fell. Chipmaker Micron Technology dropped 6.7% after announcing some production cuts because of weak demand. Nvidia fell 4.5%. Tesla, whose CEO, Elon Musk, testified in a shareholder lawsuit Wednesday, fell 3.9%. Smaller company stocks also lost ground, pulling the Russell 2000 index 1.9% lower. Wall Street has been closely watching the latest economic updates, including reports that consumer and wholesale prices continue to cool.

Much of the market's prior rally was due to hopes inflation is easing, which could portend less aggressive hikes for interest rates from the Federal Reserve. Strong consumer spending is typically a good sign for the economy, but it could make the Fed's strategy of cooling the economy more difficult. The central bank has already hiked its key overnight rate up to a range of 3.75% to 4% from virtually zero earlier this year. It has said it still plans to hike rates further and then to hold them at that high rate for a while in order to grind down inflation. "The better-than-expected retail sales results don't bolster the case that the Fed" can ease up on its campaign to slow the economy with high interest rates, says Tom Hainlin, national investment strategist at US Bank Wealth Management.

(Read more stock market stories.)

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