Today's Markets: Stocks lower after Wall Street melt, Tesla fails ESG test

Cost of living: earnings from Walmart (WMT) and Target (TGT) amounted to a red flag on the health of the consumer and helped send stocks on Wall Street to their worst daily decline since 2020. Target declined 25 per cent as it warned on profit margins due to rising costs, a day after Walmart had hurt sentiment with a downgrade. Soaring freight, labour and fuel costs are hurting earnings. Discretionary spending is being hit badly due to inflation already and companies are hurting from not being able to pass it all on. Something of a big macro fall-out from the numbers from retailers this week, not that it describes anything particularly new – just perhaps that the corporates and consumers are breaking a bit sooner – demand destruction phase. This is the sort of shock you’d normally see with the likes of a big tech name, but staples are a much clearer bellwether for the real economy.

XLP, the consumer staples ETF, fell more than 6 per cent for its worst day since the height of the pandemic, and its fourth-worst session since at least 2005. US mortgage applications didn’t help sentiment, -11 per cent vs +2 per cent previous. Mortgage applications to purchase a home fell 12 per cent week on week and were 15 per cent lower compared with the same week one year ago. Building permits, a better indicator of demand for new homes, decreased 3.2 per cent.