While you were sleeping: Target shares slump 10% on outlook

US Treasuries rose while Wall Street slid as investors reassessed the outlook for corporate profits for retailers including Target amid intensifying competition from Amazon.

At the close of trading in New York, the Dow Jones Industrial Average slumped 138.19 points, or 0.6%, to 23,271.28. The Nasdaq Composite Index declined 0.5% to 6706.21 and the Standard & Poor's 500 Index retreated 0.55% to 2564.62.

Investors and analysts shrugged off the recent decline in equities.

"When a market wants to move higher, it moves higher, nothing bothers it. But when a market needs to pull back, everything seems to bother it. Every headline bothers it," Quincy Krosby, chief market strategist at Prudential Financial, told Bloomberg.

"That's where we are right now, but if history is any guide, by history I mean the last eight years, buyers will start to pick up some of the names that they wanted to go into but were waiting for a pullback."

US Treasuries rose, sending yields on the 10-year note three basis points lower to 2.335% from 2.381% on Tuesday.

"The market often goes through a bit of a what's next in terms of a catalyst. Some of it's just a natural pullback from what has been an extraordinary year," Dave Donabedian, chief investment officer of CIBC Atlantic Trust Private Wealth Management, told Reuters.

"In recent days, the stock market is taking cues from the bond market, particularly the junk bond market and the constantly changing odds of tax reform passing is also weighing."

The latest US retail and inflation data firmed bets on a December interest rate hike by the Federal Reserve.

A Labour Department report showed its consumer price index rose 0.1% in October, following a 0.5% increase in September. Excluding food and energy, so-called core CPI advanced 0.2%, the fastest pace since January.

"The Fed has struggled this year in determining if the slowdown in core inflation has been due to a confluence of one-offs or more persistent disinflationary forces," Sarah House, an economist at Wells Fargo Securities in Charlotte, North Carolina, told Reuters.

"The pickup clears the way for a December rate hike and supports the case for continued tightening in the year ahead."

Separately, a Commerce Department report showed retail sales unexpectedly gained last month, rising 0.2%, compared with an upwardly-revised 1.9% increase in September.

The Dow fell as slides in Caterpillar and United Technologies, down 1.6% and 1.5% respectively, outweighed gains by General Electric and Nike, up 2.0% and 1.4% respectively.

Retailers tumble
Target plunged 9.9% after the retailer projected a profit for the all-important holiday quarter that fell short of expectations.

"It was always unrealistic that Target was going to have a great holiday season in terms of sales or profitability," Neil Saunders, managing director of GlobalData Retail, noting pressured margins were already expected based on company guidance, told Reuters.

"This is still a very competitive environment, and Target has no choice but to respond to that.. the problem is that Wall Street don't necessarily understand this," Saunders noted.

Meanwhile, shares of Kroger and Sprouts Farmers Market slid after Amazon said it was lowering prices of additional grocery items and holiday staples at Whole Foods Market stores, including organic and no-antibiotic turkeys.

The new discounts on organic and no-antibiotic turkeys are deeper for Amazon Prime members, the company said in a statement, calling the offer "a sneak preview" of the special savings and in-store benefits Prime members can expect when Prime becomes the official rewards program of Whole Foods Market.

"These are the latest new lower prices in our ongoing integration and innovation with Amazon, and we're just getting started," John Mackey, Whole Foods Market CEO, said in a statement.

"In the few months we've been working together, our partnership has proven to be a great fit. We'll continue to work closely together to ensure we're consistently surprising and delighting our customers while moving toward our goal of reaching more people with Whole Foods Market's high-quality, natural, and organic food."

Kroger traded 1.2% weaker at $US21.77 after sliding as low as $US21.25 earlier in the day. Sprouts traded 1.7% lower at $US20.25 after dropping as low as $US19.98 earlier in the day.

US crude fell 0.7% to $US55.33 a barrel, extending this week’s losses, after data from the US Energy Information Administration showed an unexpected increase in crude oil stockpiles.

In Europe, the Stoxx 600 Index fell 0.4%. The UK's FTSE 100 Index dropped 0.6%, Germany's DAX Index slid 0.4% and France's CAC 40 Index fell 0.3%.

(BusinessDesk)