Stocks Close Lower on Inflation Fears, Visa Weighs on Dow

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Stocks closed lower on Wednesday as investors pulled back over concerns that solid consumer spending will continue to power inflation in the final months of the year.

The Dow Jones Industrial Average finished down 211 points, or 0.58%, to 35,931, while the S&P 500 slipped 0.26% and the Nasdaq lost 0.33%.

Visa  (V) – Get Visa Inc. Class A Report was the Dow’s worst performer, closing down 4.7% after retail giant Amazon  (AMZN) – Get Amazon.com, Inc. Report said it would no longer accept credit cards issued in the United Kingdom due to the high fees it charges on payments.

Inflation concerns were reignited by a stronger-than-expected reading for October retail sales, along with robust October-quarter profits for retail giants Walmart  (WMT) – Get Walmart Inc. Report and Home Depot  (HD) – Get Home Depot, Inc. (HD) Report re-ignited inflation concerns.

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“While we remain structurally bullish on stocks, we do anticipate a push and pull of market dynamics into year-end given inflation concerns, supply chain pressures, labor shortages, and fiscal uncertainty,” said Andrea Bevis, senior vice president at UBS Private Wealth Management in Boston. 

Bevis said that even with elevated inflation, “we remain optimistic about the consumer, given healthy household balance sheets.”

“While the holiday season in November and December has the potential to provide a further consumer spending boost,” she said, “we remain aware of the limited stamina consumers have to continue to pay elevated prices for goods over the long-run.”

Target  (TGT) – Get Target Corporation Report fell 4.7% after the retailer posted stronger-than-expected third-quarter earnings and lifted its full-year outlook for same-store sales, but noted margin pressures linked to supply chain disruptions and labor costs.

Baidu  (BIDU) – Get Baidu, Inc. Sponsored ADR Class A Report U.S.-listed shares slumped 5.5% after the China-based tech giant cautioned on slowing ad sales amid Beijing’s broader crackdown on corporate profits and business practices.