Stock market crashes on worst day since pandemic over recession fears

The stock market crashed on the worst day since the outbreak of the pandemic in 2020 on fears the economy is headed for recession after several companies reported weak earnings.

The Dow Jones Industrial Average lost 1,136 points, or 3.5%, while the S&P 500 fell 4% and the Nasdaq Composite fell 4.6%.

Wednesday’s losses added to investors’ concerns over a month of falling stocks.

Quincy Krosby, Chief Equity Strategist at LPL Financial, explained that retail company profits caused the market collapse.

“Today’s broad market sell-off affects the ability of companies to pass on higher costs, a question that has been questioned but has found some answer with retailers’ earnings reports,” Krosby wrote.

“Of course, consumers continue to spend, but many of the top retailers are unable to pass on the higher labor costs and higher prices caused by a still-constrained supply chain,” he added.

Among them was Target, which reported lower earnings despite rising sales as spending rose more due to inflation. As a result, Target’s stock fell more than a quarter.

“Higher costs coupled with more cautious consumers are making the market worry about the prospect of a recession,” Krosby added.

The market also appeared to be reacting to Federal Reserve Chair Jerome Powell’s comments on Tuesday that the Fed was poised to raise interest rates even more to fight inflation.

On Monday, an analysis by Morgan Stanley said the Biden administration’s “excessive” fiscal stimulus spending was to blame for “turbocharged” consumption and rising inflation.

“In other words, we have created too much demand for supply chains. The fact that supply chains have been disrupted to some degree has only exacerbated shortages and inflation, particularly in consumer goods,” the analysis reads.

Voters in a recent poll said they blame Biden’s policies for inflation more than any other cause, including the invasion of Ukraine, the pandemic and alleged corporate greed.

Here is more about the stock market crash:

Retailer Target’s worries are raising fears of inflation Stock market crashes on worst day since pandemic over recession fears

Laura Coffey

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