Stock Market Has Another Rough Day - Don't Look At Your 401K

The Dow Jones Industrial average dropped 1,138 points, equivalent to 3.5%, on Wednesday (May 18), marking its largest decline since October 2020, CNBC reports.

The Dow has now declined more than 800 points on five occasions this year, all of which took place amid heavy selling within the last one month, according to FactSet data obtained by CNBC.

Additionally, S&P 500 was 4% lower, which marked its largest drop since June 2020, while the Nasdaq Composite dropped 4.7%, its greatest drop since May 5.

The heavy selling comes after quarterly reports from Target and Walmart which continued to scare investors about the rising inflation rates.

“It’s clear that transportation costs matter and they’re impacting [some of] the largest companies,” said Kim Forrest, founder of Bokeh Capital, via CNBC. “So I think investors are scratching our heads going, ‘so, who’s next?’ And they’re giving visibility into what’s happening with the consumer.” 

Target shares dropped more than 26% on Wednesday after the retailing giant reported first-quarter earnings much lower than Wall Street estimates, citing the rising costs for fuel and compensation.

Walmart had previously shared its earnings on Tuesday, which were also significantly lower than expectations due to fuel and compensation, with shares dropping by 11% on Tuesday (May 17) and again by 6% on Wednesday.

“The consumer is challenged,” said Megan Horneman, chief investment officer at Verdence Capital Advisors, via CNBC. “We started to see at the end of the year that consumers were turning to credit cards to pay for the rise in food prices, rise in energy prices, and that’s actually gotten much worse. ... This is going to hurt those bellwether retail places and Walmart tends to be one of them.”