Stock futures fell on Tuesday after Target issued a warning about its current quarterly profits, raising fears of a possible recession.
Futures tied to the Dow Jones Industrial Average fell 258 points, or 0.8%. S&P 500 futures and Nasdaq 100 futures also fell 0.9% and 1.1%, respectively.
Target stock falls 9% after retailer announces plans To reduce excess inventory, The company said it would apply additional markdowns to the products and cancel some orders. Target also lowered its operating margin guidance for the quarter. Walmart shares tumbled 4.3% after Target.
All three major averages ended slightly higher on Monday. After jumping more than 300 points earlier in the day, the Dow ended the day down by about 16 points, or 0.1%. The S&P 500 gained 0.3% and the tech-heavy Nasdaq Composite gained 0.4%.
On Monday, the index gave back most of its gains from day one as the 10-year Treasury yield rose to 3% and hit its highest level in nearly a month.
Sentiment was largely muted on Monday, with US economic data not being released and the Federal Reserve a calm in the blackout period. There were no earnings reports for major companies either.
“Since the beginning of the year when you look at the valuation multiple, we’re seeing altitude sickness,” said Ed Yardney, president of Yardney Research. He spoke on CNBC”Closing Bell: Overtime,
“To a large extent, clearly, the market was overvalued, with the benefit of retrospectives,” he said. “A lot of that was in the negative cap seat, big cap name, related companies. I think we’ve seen tremendous improvement in that area. And now the question is, can the market accept that kind of earnings expectations? which analysts are to deliver and whether those expectations will be accurate.”
Investors are still following a lighter week in the company’s earnings. Shares of United Natural Foods were rising in premarket trading after the wholesale company beat expectations for its fiscal third quarter. However, food store JM Smucker was under pressure following its quarterly report.
In economic data, the May consumer price index reading is one of the big things investors are focusing on, which is due out on Friday. If the predicted readings are cooler than the April numbers, some may interpret this as a sign that inflation is peaking.