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Dow falls 1,000 points as low earnings at retailers like Target stoke inflation fears

U.S. stocks fell sharply on Wednesday after another major retailer warned of mounting cost pressures, confirming inflation fears that have sent major benchmarks to steep losses this year.

The Dow Jones Industrial Average fell 1,029 points, or 3.2%, with the average set for its first loss in four days. The S&P 500 traded down 3.6%, while the Nasdaq Composite fell 4.3%.

Markets began to sell off again after back-to-back quarterly reports from Target and Walmart raised fears of rising inflation among investors. This is the Dow’s fifth more than 800-point decline this year, which has occurred as equity selling has intensified over the past month, according to FactSet data.

“It is clear that transport costs matter and have an impact [some of] the biggest companies,” said Kim Forrest, founder of Bokeh Capital. “So I think investors are scratching their heads saying ‘so who’s next?’ And they give visibility into what is happening with the consumer.”

Target shares fell more than 26% on Wednesday after the retailer reported first-quarter earnings well below Wall Street estimates due to rising fuel and compensation costs. The retailer also saw weaker-than-expected sales for discretionary merchandise like televisions.

The retailer’s report comes just after Walmart reported earnings below expectations on Tuesday, as it also cited higher fuel and labor costs. Shares of Walmart ended Tuesday down 11%. They were still down 6% on Wednesday.

“The consumer is being challenged,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “We started to see at the end of the year that consumers were turning to credit cards to pay for rising food prices, rising energy prices, and it actually got much worse. … It’s going to hurt those flagship outlets and Walmart tends to be one of them.

Sarah Min contributed reporting.

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