Stock market falls sharply after Target reports sales drop

CBS News

21-05-2025

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Stocks are slumping amid signs of slowing consumer spending and investor concerns about the U.S. fiscal outlook.
Target, one of the nation's largest retailers, on Wednesday reported weaker sales for the first quarter and warned of a potential downdraft over the rest of the year as Americans react to U.S. tariffs by pulling back on consumption.
The company's sales fell 2.8% to $23.8 billion in the January-March period, down from $24.5 billion from the year-ago quarter, while Target said it expects a low-single digit decline in sales for 2025.
Target "faced several additional headwinds this quarter, including five consecutive months of declining consumer confidence [and] uncertainty regarding the impact of potential tariffs," CEO Brian Cornell said in a call with Wall Street analysts.
Shortly before the close of trade, the S&P 500 fell 106 points, or 1.8%, to 5,835. The Dow Jones Industrial Complex dropped 865 points, or 1.5%, while the Nasdaq Composite dropped 1.3%.
Target shares fell 5.7% to $92.50 in afternoon trade.
Such weakness comes as more companies say that rising economic uncertainty is clouding their financial prospects. Other large retailers, including Walmart, have said they plan to hike prices to offset tariffs imposed by the Trump administration on China and other countries.
Shrinking corporate sales and profits could eventually shackle job growth, which has remained resilient in recent months, experts note.
"Businesses expect growth in consumer demand to slow and view the outlook as unusually uncertain, so they are pausing hiring," analysts with Pantheon Macroeconomics said in a research note.
Some retailers are benefiting from the current environment as some consumers tighten their belts. Discount giant TJX Companies, whose brands include HomeGoods, Marshall's and TJ Maxx, on Wednesday reported a 5% rise in net sales for its fiscal 2026 first quarter from a year ago.
Tax bill overhang
Investors are also assessing how a Republican-backed tax and spending bill now being negotiated in the House could impact the nation's finances. Moody's on Friday highlighted the government's growing debt pile in its decision to downgrade the U.S. credit rating. A weaker credit rating raises borrowing costs for the U.S.
"We do not think that the downgrade matters by itself," Bank of America strategists wrote in a report, "but it has served as a wake up call for those investors who had been ignoring the ongoing fiscal discussion."
Stocks were also feeling pressure from higher Treasury yields in the bond market, which can weigh on other types of investments. Bond prices have dipped because of concerns that a move in Congress to extend tax cuts could add trillions to the federal debt.
"The bulk of the bill simply extends existing [tax] rates rather than lowering them incrementally," equity analyst Adam Crisafulli, head of Vital Knowledge, said in a note to investors. "In addition, there are some offsets that could financially harm lower-income Americans. Most important, the legislation is massively expensive and will add further to the debt/deficit at a time when both are already extremely unbalanced."
Alain Sherter
Alain Sherter is a senior managing editor with CBS News. He covers business, economics, money and workplace issues for CBS MoneyWatch.
contributed to this report.