American stock markets had their worst single-day performance since the outset of the Covid-19 pandemic after major retailers reported lower than expected earnings for the first quarter of 2022.
Retail giant Target reported a 52 per cent drop in profits last quarter, which the company attributed to higher expenses stemming from supply chain disruptions and consumers postponing non-essential purchases on account of inflation.
The nation’s largest retailer, Wal-Mart, also reported lower than expected earnings, with CEO Doug McMillon telling reporters and analysts the fast-moving US inflation jump “both in terms of food and general merchandise” has been “unusual”.
Stock prices began falling almost immediately after the retailers put out their earnings reports, and by the close of trading on Wednesday, the Dow Jones Industrial Average — a major US stock market barometer — had lost more than 1,100 points, posting the worst performance shown since March 2020. The Standard and Poor 500 index and Nasdaq both dropped by more than four per cent as well.
The dramatic stock slides have wiped out the gains investors have made as the US has recovered from the Covid-19 pandemic, and they reflect investor fears that rising inflation — a global phenomenon made worse by Russian Vladimir Putin’s invasion of Ukraine, which Republicans have tried to pin solely on President Joe Biden’s shoulders — could send the US economy into a recession.
While Mr Biden’s predecessor, Donald Trump, frequently took credit for stock performance during his term, Mr Biden has largely declined to do so.
Asked about the dismal stock market performance during her daily press briefing, White House Press Secretary Karine Jean-Pierre said the market was “not something we keep an eye on every day,” but maintained that addressing inflation was a priority for Mr Biden.
Asked what the White House’s message to spooked investors would be, Ms Jean-Pierre replied: “I’m not going to speak to the stock market. But you know, this is something that is very important to the President when it comes to inflation … and making sure that we lower costs for the American people”.