US markets have plunged again after downbeat reports from some of America's biggest retailers intensified fears that fast-rising prices will send the economy into slowdown.
Target said profits had halved due to high fuel and freight costs.
Its report followed a similar update from Walmart.
Customers are looking for affordability, limiting plans for price rises, according to executives.
The decline in Target shares was the biggest decline in more than three decades of trade.
Concerns about the implications for other firms and the wider US economy caused financial markets to tumble on Wednesday.
"What people are worried about is, will more earnings have to be taken down?" said Thomas Hayes, chairman of Great Hill Capital in New York.
Consumer sentiment is at multi-year lows and tied to inflation. People are looking for signs of inflation moderation, and Target did not give them any today.
The S&P 500 index, which tracks shares of a wide swathe of America's biggest companies, plunged more than 4%, while the Dow Jones dropped 3.5%.
The tech-laden index fell. The US financial markets have been falling for weeks.
The updates from Target and Walmart were closely watched for signs of how consumer spending is holding up in the world's largest economy, as inflation reaches 40-year highs.
Retail sales rose a healthy 0.9% in April, but some analysts warn the figures may be understating signs of a slowdown since they are not adjusted for inflation.
Amazon reported a drop in online sales in the first three months of the year.
In the three months to May, Target said sales at stores open for at least a year were up more than 3%. As prices rise, shoppers are spending more on essentials and less on discretionary items.
Fuel and freight costs will be $1 billion higher than expected this year. The firm said supply chain pressures wouldn't clear until at least 2023.
All Rights Reserved © 2024
