Retail stocks slump as Target battles inflation, margin pressure

Yahoo Finance Live’s Akiko Fujita and Brian Cheung discuss retail stocks slumping on Wednesday as companies like Target continue battling inflation.

Video transcript

[MUSIC PLAYING]

BRIAN CHEUNG: A down day in markets. Welcome to "Yahoo Finance Live." I'm Brian Cheung.

AKIKO FUJITA: And I'm Akiko Fujita. It is 11:00 AM here in New York City and as Brian said, we are seeing a sell-off on Wall Street right now. Take a look at where the Dow is trading-- down more than 500 points right now. We're also seeing other major indices in the red as well. The NASDAQ down 1.8%, while the S&P 500 is down nearly 2%. Treasury yields, in terms of the 10-year yield, still holding below that 3% level. But Brian, let-- let's take a look-- I'm making you jump all over here. But--

BRIAN CHEUNG: I have a lot, yeah.

AKIKO FUJITA: Let's take a look at the sell-off that we're seeing right now. It is pretty broad-based, but if you look at the sectors that are getting especially hard-- hit hard, it's consumer discretionaries, consumer staples as well. And of course, our eyes are on the retail space today. We're going to get to Target in just a bit. But a lot of names getting dragged down--

BRIAN CHEUNG: Yeah.

AKIKO FUJITA: --in that space.

BRIAN CHEUNG: As you mentioned, consumer staples, the biggest loser in far of-- as far as sectors go on this Wednesday morning, down 4%. But as you mentioned, a lot of this coming after the news of Target reporting their earnings. We'll get into the nitty gritty a little later on, but that stock down at 24%.

But what's very interesting is that you have a number of other consumer-facing names that are getting dragged down as well, even though they haven't reported any earnings. BJ's Wholesale Club, again, one of those discount retailers, down 16%. A stock that you and I love to talk about, Costco, down 11%. Dick's Sporting Goods, 11, Dollar Tree, 16%, Dollar General down 12%. I mean, it's just carnage across the board.

At first glance, it might be saying, well, is this a little bit dramatic? But again, it's just underscoring the macro picture here. It's not that Target is having an idiosyncratic company story. It's really industry wide and honestly, Akiko, macro as well.

AKIKO FUJITA: Well, and part of it is because what we've heard on these earnings calls-- yesterday and from Walmart, Target today--