Stocks couldn’t hang on to an afternoon rally Thursday that briefly pushed major indexes into the green.


Dow Jones Industrial Average

closed down 237 points, or 0.75%, on Thursday, one day after the index tumbled 3.6%, suffering its worst single-day decline since 2020. The Dow had been down 474 points at its morning lows but had rebounded to positive territory around 3 p.m.


S&P 500

finished down 0.6% and the

Nasdaq Composite

slipped 0.3%, giving up an afternoon gain of 1.3%. The S&P 500 and Nasdaq dropped 4% and 4.7% on Wednesday, respectively.

Bonds acted like the havens they’re supposed to be. The yield on the 10-year U.S. Treasury declined 0.03 percentage point, to 2.85%, as the price of the note rose. The

iShares Core U.S. Aggregate Bond

exchange-traded fund (ticker: AGG) ticked up 0.2%.

Wednesday was an ugly day for stocks, which erased about $1.5 trillion in market value. “It was nothing short of a rout,” wrote Henry Allen, an analyst at Deutsche Bank.

The S&P 500 has shed more than $7 trillion in market value since the start of 2022. The index flirted with a bear market, which represents a 20% fall from recent highs, on Thursday, finishing at 3,901 points. The level to watch is 3,837 points. The Nasdaq Composite is already in a bear market—down almost 30% so far in 2022.

Driving the latest selloff are continuing concerns around inflation, including how higher costs will eat into corporate profit margins, and slowing economic growth. Supply-chain challenges and high transport costs battered retailer


(TGT) in the last quarter, the company’s earnings showed, causing its shares to plunge 25% on Wednesday to lead stocks lower. The big box retailer’s revenue rose from the year-earlier period, but net income tumbled 50% as it struggled to pass along higher costs.


(WMT) earnings told a similar story earlier in the week.

In an overall gloomy backdrop, stock-market bulls often point to the strength of the consumer and the support from rising corporate earnings this year. The results from Walmart and Target this week challenged that thesis.

“You can’t look at the news from Walmart and Target and at least consider if you’re missing something,” Credit Suisse’s Chief U.S. Equity Strategist Jonathan Golub told Barron’s. “If the consumer has to make choices and spend less money, and if retailers aren’t able to profitably pass on higher expenses, then this marks a bigger problem.”

But Golub sees those issues as confined to the retailers, and not as a concern for the broader market. He notes that excluding banks, S&P 500 revenues were up 15% in the first quarter and earnings rose 20%. That means profit margins were expanding, not contracting.

And while consumers may be spending less on certain big-ticket physical goods like TVs, couches, or lawn mowers, pent-up demand for experiences is high. Lots of savings and a strong job market support further spending.

Golub has a 4900 target for the S&P 500 at the end of 2022, which would be an increase of about 25% from current levels.

Other concerns weighing on pessimistic investors’ minds these days include supply-chain snarls and rising interest rates.

Beyond pinching profits, supply-chain disruptions send inflation higher, raising the likelihood that the Federal Reserve will move more aggressively to tighten monetary policy. The Russia-Ukraine war and Covid-19 lockdowns in China are worsening inflation, too.

The Fed is already expected to raise interest rates many more times this year to get inflation under control, risking starting a recession by ratcheting up borrowing costs and denting economic demand.

With stocks heading lower again, is the capitulation among investors denoting a market bottom finally here?

“When the selling in equity markets spreads from speculative technology names to bricks-&-mortar retailers selling everyday goods, it’s not a completely unfair question,” wrote analysts at market data firm Quant Insight.

Even the best-performing areas of the market have gotten hammered of late, noted V22 technical analyst John Roque, pointing to big declines in the

Consumer Staples Select Sector SPDR ETF

(XLP), which dropped 6.4% on Wednesday, and the

Dow Jones Transportation Average,

which slid 7.4%. They were down 1.8% and 1.9%, respectively, on Thursday.

Both had been outperforming the S&P 500 in 2022, but gave back big chunks of that outperformance on Wednesday. “It has often been said by market old-timers (we’re self-aware!) that ‘in a bear market they come for everyone,’ which means, unfortunately, that it was only a matter of time before the groups that had been holding up relatively better than the S&P…get hit, too,” Roque wrote.

Maybe that will bring the stock market one step closer to a bottom.

The selling continued overseas on Thursday, where the pan-European

Stoxx 600

fell 1.4% and Tokyo’s

Nikkei 225

lost 1.9%. China’s

Shanghai Composite

advanced 0.4%, however.

Here are stocks on the move Thursday:

Cisco Systems

(CSCO) dropped 13.7% after the networking-gear maker issued a weak sales forecast for its current quarter. Its earnings report late Wednesday sent shares in peers lower, with

Juniper Networks

(JNPR) down 3.5%,


(AVGO) off 4.3%, and

Arista Networks

(ANET) finishing 1.4% lower.

Chinese tech stocks fell, with the Hong Kong-listed shares of


(0700.H.K.) tumbling 6.5%. Weak earnings, and in particular profits below Wall Street’s expectations at and Tencent, have heaped pressure on a sector already facing regulatory headwinds.


(KSS) added 4.4% despite its earnings missing analyst estimates. The retailer also lowered its guidance.

Under Armour

(UAA) fell 12% after its CEO surprisingly left the company.

Write to Jack Denton at [email protected] and Nicholas Jasinski at [email protected]

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