NEW YORK, May 18 (Xinhua) -- U.S. stocks plummeted on Wednesday as weak earnings from major retailers stoked concerns about the impact of inflation.
The Dow Jones Industrial Average plunged 1164.52 points, or 3.57 percent, to 31,490.07. That marked its worst daily percentage decline since June 2020, according to Dow Jones Market Data. The S&P 500 fell 165.17 points, or 4.04 percent, to 3,923.68, also booking its worst daily drop since June 2020. The Nasdaq Composite Index shed 566.37 points, or 4.73 percent, to 11,418.15.
All the 11 primary S&P 500 sectors ended in red, with consumer discretionary and consumer staples down 6.6 percent and 6.38 percent, respectively, leading the losses.
Target shares tumbled nearly 25 percent after the U.S. retailer reported quarterly earnings that fell far short of Wall Street's expectations as cost increased in areas such as freight and inventory surged.
It followed Walmart's lower-than-anticipated profit report on Tuesday that was also blamed on inflation. Walmart shares sank 6.8 percent on Wednesday, following an 11-percent drop in the prior session.
Big earnings misses by major retailers reignited investors' fears that high inflation could further eat into corporate profits.
Federal Reserve Chairman Jerome Powell on Tuesday stressed the U.S. central bank's resolve to curb the hottest inflation in decades.
Speaking at an event of The Wall Street Journal, Powell said the Fed would keep raising interest rates until there was "clear and convincing evidence" that inflation was in retreat.
Earlier this month, the Fed announced a half-point increase in its benchmark rate, the sharpest rate hike since 2000, and signaled that hikes of similar magnitudes remain on the table at the next couple of meetings.
Investors were concerned that the central bank could cause a recession if it raises rates too high or too quickly.
"Investor sentiment and confidence remain shaky, and as a result, we are likely to see volatile and choppy markets until we get further clarity on the three R's-rates, recession, and risk," analysts at UBS said in a note on Wednesday.