US stock indexes closed with a sharp drop on Wednesday.
The S&P 500 index has collapsed at a record high since June 2020. The negative reports of the largest retailers have increased investors' fears about the recession.
The US stock market fell sharply on Wednesday, which was the worst day since 2020 for two of the major indexes (DJIA and S&P 500).
The DJIA index fell by 3.57%, the high-tech Nasdaq collapsed by 4.73%, the S&P 500 broad market index collapsed by a record 4.04% since June 2020.
The largest retailers reported on Wednesday that rising prices, sluggish sales and supply problems are undermining their profits, writes DJ Newswires.
Target shares lost almost 25%, and Dollar Tree, Dollar General and Costco Wholesale shares showed the biggest one-day drop in many years (in the case of Costco - since 2003).
Against the backdrop of these disappointing results, investors once again began to reflect that the global economy is heading for recession. The latest data, which showed the force of the blow inflicted by inflation on consumers in the United States, only worsened the situation.
"Due to inflation, consumers no longer buy more expensive goods that they used to buy. This is evident in the data of company profit reports," NEIRG Wealth Management notes.
Investors' main attention is now focused on inflation in the United States, which has reached 40-year highs, the actions of central banks planning to tighten monetary policy to combat such high inflation, as well as the consequences of these actions for economic growth.
Fed Chairman Jerome Powell made a tough speech on Tuesday, saying that the Central Bank's determination in the fight against inflation should not be questioned, even if it would lead to an increase in unemployment.
The difficult geopolitical situation affecting the dynamics of oil, as well as China's actions to combat coronavirus, also continues to have a negative impact on the markets.