Dow Jones Futures Fall After Target Triggers Sell-Off; Market Rally Has 90%

Dow Jones futures fell sharply early Thursday, along with S&P 500 futures and Nasdaq futures, amid weak revenue and guidance from Cisco Systems. The stock market rally sold off hard Wednesday, as a big Target (TGT) earnings miss raised major concerns about retailers, related sectors and the broader economy amid hot inflation and weakening demand.


Wednesday’s sharp selling comes right on the heels of the major indexes staging a follow-through day to confirm the new stock market rally, flashing bearish signals. Thursday’s futures suggest that the major indexes could undercut or test their rally lows on May 12. Undercutting would end the short-lived rally.

After the close, Cisco Systems (CSCO) reported earnings. Cisco earnings edged past fiscal Q3 views, but revenue missed and the networking giant also guided lower for the current Q4, citing supply chain issues from China’s lockdowns. CSCO stock plunged 12% early Thursday. Arista Networks (ANET) and other related stocks also fell solidly.

Fertilizer and lithium play Sociedad Química y Minera de Chile (SQM) reported Q1 EPS skyrocketed 973% vs. a year earlier early Thursday, as sales exploded 282% to $2.02 billion, both crushing views. SQM stock jumped 5% before the open, signaling a gap-up breakout. Shares edged up 0.4%% to 90.21 Wednesday after hitting 93.14 intraday, briefly topping a 90.97 buy point.

The video embedded in this article discussed Wednesday’s market sell-off and analyzed TGT stock, Northrop Grumman (NOC) and Broadcom (AVGO).

Target Earnings Bad News For Retail

Target earnings tumbled 41%, far more than expected. The retailer blamed shipping costs as well as consumers shifting from TVs and other discretionary items. Target sees margin pressures throughout the current fiscal year. That came a day after Walmart (WMT) missed on EPS and guided low, citing higher costs for goods, shipping and labor. At the time, investors might have thought or hoped that Walmart’s woes were company-specific, but Target’s results signaled a much-broader problem.

Target stock crashed 25% to 161.61. Walmart sank 6.8% after tumbling 11.4% on Tuesday. Both are at the lowest since 2020.

If Walmart and Target are struggling in the current economic climate, that can’t be good for other discounters and retailers and general.

Dollar Tree (DLTR) plunged 14.4% after slipping 3.2% on Tuesday. DLTR stock had been holding up well, but dropped below its 50-day on Tuesday and crashed to its 200-day line. Costco Wholesale (COST) lost more than 12%, after already round-tripping a breakout and dropping below key moving averages in recent weeks. Both Dollar Tree and COST stock report next week.

Best Buy (BBY), which reports early Thursday, sank 10.5% to a two-year low.

Trucking Firms, Tesla, Apple Stock Hit

J.B. Hunt Transport Services (JBHT) sold off 9%, tumbling from near its 10-week line. As consumer demand weakens, trucking companies may see weaker demand, and struggle to pass on skyrocketing diesel fuel prices.

Apple stock tumbled 5.6% to 140.82, a six-month closing low, as the Target warning on consumer discretionary spending added to fears for the Dow Jones tech titan. In the past several weeks, iPhone contract manufacturer Foxconn and Taiwan Semiconductor (TSM), which makes chips for Apple (AAPL) and many others, warned of weak smartphone demand. AAPL stock is on track for an eighth straight weekly loss.

Tesla stock tumbled 6.8% to 709.81, the lowest close since August. While weaker consumer discretionary in theory could hurt demand for Tesla’s high-priced electric vehicles, overall auto production is so low that supply is still the overriding factor. Tesla (TSLA) is being pressured along with other highly valued growth names, along with Shanghai plant output issues and CEO Elon Musk’s ongoing Twitter (TWTR) takeover saga. Twitter stock fell 3.8% to 36.85, a two-month low and even further below Musk’s $54.20 takeover price.

Also, the S&P 500 ESG index booted Tesla, largely on corporate culture issues, triggering more angry tweets from Musk.

Meanwhile, the U.S. National Highway Traffic Safety Administration is probing a Tesla Model S crash earlier this month that killed, possibly involving Autopilot. The NHTSA is probing dozens of Autopilot-related accidents.

Tesla Vs. BYD: Which Booming EV Giant Is The Better Buy?

Dow Jones Futures Today

Dow Jones futures fell 1.3% vs. fair value. S&P 500 futures dropped 1.3%. Nasdaq 100 futures declined 1.4%. Cisco stock is a Dow Jones, S&P 500 and Nasdaq component. Several other networking and hardware stocks also lost ground.

The 10-year Treasury yield fell 6 basis points to 2.83%.

U.S. crude oil prices retreated nearly 1%. Gasoline futures are falling harder.

Overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. But, if futures do hold up to the open, the Dow Jones would break below its May 12 rally lows while the S&P 500 might do…

Read More: Dow Jones Futures Fall After Target Triggers Sell-Off; Market Rally Has 90%

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