Stock futures fall as more companies warn of rising costs, pitting target stocks

US stock futures fell on Wednesday after another major retailer warned of rising cost pressures, underscoring concerns about inflation that has led to huge losses by key metrics so far this year.

Dow Jones Industrial Average futures fell 99 points, or 0.3%, with the average set for a first loss in four days. S&P 500 futures traded 0.5% lower, while Nasdaq 100 futures were down 0.7%.

Target stocks fell more than 22% in pre-market trading after reporting first-quarter earnings well below Wall Street estimates due to higher fuel and compensation costs. The retailer also saw lower-than-expected sales of discretionary merchandise such as televisions.

Lowe’s shares fell more than 2% in premarket trading after it missed sales expectations in its first-quarter report, as shoppers bought fewer supplies for outdoor projects.

On Tuesday, Walmart’s earnings missed expectations as it also pointed to higher fuel and labor costs. Walmart shares closed Tuesday 11% lower. They are down another 2% in pre-market trading on Wednesday.

Wednesday’s market reversal comes after stocks have been rallying from this year’s lows. On Tuesday, the Dow Jones rose 431 points, or 1.3%, while the S&P 500 rose 2%, and the Nasdaq Composite rose about 2.8%. The Dow has fallen for seven straight weeks, but stocks have been flat over the past three trading sessions. Last week, the S&P 500 plunged on the brink of a bear market – or 20% below its record high – but the index is now up 4% since Thursday’s close.

Despite the recent comeback, the S&P 500 is down 14% for the year, while the Nasdaq is down 23%.

Gas prices have risen steadily, which has contributed to the inflationary pressures the economy has experienced. The national average for a gallon of regular gasoline hit a record $4,567 on Wednesday, according to the AAA. Prices are up 48 cents from last month, and $1.52 more than consumers paid last year.

Each state now averages more than $4 per gallon, with some states paying much more than that. In California, the state average is over $6.

Stocks and other risky assets have come under inflationary pressure and the Federal Reserve’s attempt to curb price increases by raising interest rates has led to concerns about a possible recession. Federal Reserve Chairman Jerome Powell said at the Wall Street Journal conference on Tuesday that “there will be no hesitation” about raising interest rates until inflation is brought under control.

However, some recent economic data, including the jobs report and retail sales data from April, are still showing growth in the US economy.

“There is a big difference between corrections in the equity markets and direct bear markets,” said Matt Stuckie, senior portfolio manager at Northwestern Mutual Wealth Management. “The divergence in bear markets almost always has to do with some kind of sluggish macroeconomic environment, or at least one that is inevitable on the outlook horizon over the next six to twelve months. For us, as we sit here today, just don’t see that.”

CNBC’s Pippa Stevens contributed to this report.

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