Dow drops 1,100 points for its biggest decline since 2020 as the sell-off this year on Wall Street intensifies

The Dow Jones Industrial Average headed for its biggest loss since 2020 on Wednesday after another major retailer warned of rising cost pressures, confirming investors’ worst fears over rising inflation and rekindling the brutal 2022 sell-off.

The Dow shed 1,255 points, or 3.8%, or the average’s biggest decline since October 2020. The S&P 500 traded 4.3% lower, the biggest drop since June 2020. The Nasdaq Composite slipped 4.9%, the largest fall in the tech-heavy index since May 5. The selling was broad and intense on Wall Street with just 13 members of the S&P 500 in the green.

Markets returned to heavy selling after two back-to-back quarterly reports from Target and Walmart stoked investor fears of rising inflation. It’s the fifth Dow decline of more than 800 points this year, which all occurred as the stock sell-off intensified within the last one month, according to FactSet data.

“It’s clear that transportation costs matter and they’re impacting [some of] the largest companies,” said Kim Forrest, founder of Bokeh Capital. “So I think investors are scratching our heads going, ‘so, who’s next?’ And they’re giving visibility into what’s happening with the consumer.”

Target shares tumbled more than 27% Wednesday after the retailer reported first-quarter earnings that were much lower than Wall Street estimated because of higher costs for fuel and compensation. The retailer also saw lower-than-expected sales for discretionary merchandise like TVs.

The retailer’s report comes right after Walmart on Tuesday posted earnings that fell short of expectations as it too cited higher fuel and labor costs. Walmart shares ended Tuesday lower by 11%. They were down another 7% on Wednesday.

“The consumer is 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 the rise in food prices, rise in energy prices, and that’s actually gotten much worse. … This is going to hurt those bellwether retail places and Walmart tends to be one of them.”