The S&P 500 fell on Wednesday as investors weighed a dismal holiday quarter update from Target that weighed on the retailer’s shares.
The broad market index was down 0.8% and the Nasdaq Composite was down 1.4%, while the Dow Jones Industrial Average struggled to flatline.
The moves came after Target reported a decline in sales as families grapple with high inflation heading into the retailer’s biggest shopping season of the year. The warning weighed on shares, sending Target down more than 15% and on pace for its worst day since May. Advanced Auto Parts and Target both fell by double-digit percentages. Macy’s, Kohl’s, Nordstrom and Gap also fell sharply.
“A volatile earnings season for retail is forcing investors to be picky and particular about their retail exposure as the gap between big box and specialty retail continues to widen,” said the 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 the pace to post slight gains for the week. The producer price index report, which measures wholesale prices, came in below expectations, easing some investor concerns about inflation.
Stocks have performed well following last week’s better-than-expected consumer price index report. The S&P 500 posted its best weekly stretch since June last week and all major averages are on track to end the month with gains.
Some investors say, however, that a short-term pullback is on the horizon.
“In the short term, the market is overextended and has been slow to pull back and digest the recent rally,” said Adam Sarhan, managing director of 50 Park Investments.