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US stocks head for worst day since 2020 amid recession fears

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The Dow Jones Industrial Average, an index of blue chip companies, was heading for its worst day since 2020 on Wednesday as investors panicked once more over rocketing inflation and a possible recession.

The Dow dropped nearly 4% after a series of retailers posted disappointing results, its largest decline since October 2020.

Shares in Target, one of the largest retailers in the US, plunged by 26% after the company pointed to rising cost pressures, stoking investor fears around inflation.

Target’s quarterly results also badly missed analysts’ expectations, sending its share price crashing down to its worst day since 1987.

Other retailers echoed Target’s sentiment, saying their profits were hit by slow sales, supply chain issues, and spiralling costs.

Shares of Dollar Tree, Dollar General and Costco Wholesale were also headed for their steepest declines in years.

The sell-off marked a sharp reverse from Tuesday, when markets rebounded after a strong performance by key technology stocks.

“Inflation is hitting every aspect of an earnings report, whether it be the transportation side or supply-chain disruption,” Nick Giacoumakis, president and founder of NEIRG Wealth Management told the Wall Street Journal.

“Customers are no longer buying the more expensive items they would typically buy. All this trickles through to an earnings report.”

Since the start of this year, the S&P 500 is down by 16.25%, while the Dow is down by 11.25%.

Meanwhile, the Russell 2000 – the main index for US smaller companies – has fallen by 21.5% since the start of the year, and the Nasdaq is down by 25.75%.

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