Your Evening Briefing: Retailers Bring Wall Street to Its Knees

US consumers are shifting their spending from merchandise to services, a worrying trend for retailers that spent the past two years profiting from a pandemic spending binge. And while the development may be a promising sign for snarled supply chains and inflation, on Wednesday Wall Street was focused on the more immediate damage being wrought by higher costs. US stocks posted their biggest daily drop in almost two years, sending the S&P 500 down 4%, with a plunge in consumer shares surpassing 6%. Target Corp. plummeted more than 20% in its worst rout since 1987 after cutting its profit forecast. Walmart and Macy’s were sucked into the vortex as well. “Disappointing quarterly numbers from retail giants Target and Lowe’s are striking fear into the market,” says Fiona Cincotta at City Index. “The data yesterday suggests that consumers are weathering the inflation hit for now. Retailers, however, are not doing so well at navigating through soaring input costs.”

Bloomberg is tracking the coronavirus pandemic and the progress of global vaccination efforts.