How are stock indexes trading?

• The Dow Jones Industrial Average
  DJIA,
  -3.51%
   fell 1,151 points, or 3.5%, to 31,515, and near the session low of 31,483.79.

• The S&P 500
  SPX,
  -3.89%
   declined 161 points, or 4%, to 3,926.

• The Nasdaq Composite
  COMP,
  -4.46%
   shed 560 points, or 4.7%, trading at 11,420.

On Tuesday, the Dow Jones Industrial Average gained 431.17 points, or 1.3%, to close at 32,654.59, rising for a third straight day. The S&P 500 climbed 80.84 points, or 2%, to finish at 4,088.85. The Nasdaq Composite jumped 321.73 points, or 2.8%, to end at 11,984.52.

What’s driving the markets?

Wall Street was caught in another sharp selloff Wednesday, this time sparked by signs of price pressures at big-box retailers that are eating into corporate margins.

Selling hit the consumer sectors hardest, with Target Corp. TGT shares tumbling 26% after the retailer reported earnings that fell far short of expectations. But tech, energy and other swaths of the market also were swept up.

“Obviously, the pressures we are seeing are from Target, following Walmart, in acknowledging price pressures,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management, by phone.

“I think that people involved in the market are now going to be even more concerned with inflation, and the pressures that it brings to things like margins,” he said. “But sometimes, it’s also run for the hills and ask questions later.”

Pavlik also said there’s not much conviction in the market. ”As someone who might be willing to do some buying of quality companies, why should I step in now, when prices are likely still going to go down?”

Shares of Lowe’s Cos. LOW fell on mixed results from the home-improvement retailer. TJX Cos.
TJX,
+6.39%
shares were up 7.1% Wednesday after the TJ Maxx operator reported double-digit percentage growth in earnings for its first quarter. Cisco Systems Inc. CSCO will report after the close.

Read: Why are stocks falling? Fragile ‘bear market’ bounce underlines investor jitters

“As the selloff intensifies and leads the S&P 500 lower towards the 16 times forward earnings level and below into the 15 times range,” said Quincy Krosby, chief equity strategist for LPL Financial, “the market may be close to discounting slower growth, a Fed still continuing to raise interest rates and unwind its balance sheet—-but not yet a recession,” in emailed comments.

U.S. Treasury Secretary Janet Yellen on Wednesday warned of fallout from Russia’s war in Ukraine that could spell stagflation for the global economy, as higher food and energy prices depress output and spending around the world, while speaking ahead of a Group of Seven finance ministers meetings in Bonn.

Investors also were taking a fresh look at comments from Powell, who on Tuesday spoke of possible “pain” for Americans as the central bank moves resolutely to bring down inflation by raising interest rates. He was speaking at The Wall Street Journal’s Future of Everything event. 

“What concerns me is that the Fed is limited in its tools to tackle the particular type of inflation we are facing. They’re kind of using a hammer to put in a screw,” Kevin Philip, partner at Bel Air Investment Advisors, said in an interview.

Read: Fund managers’ cash pile is the biggest since 2001, says Bank of America

On U.S. economic data, construction of new houses fell slightly in April for the third month in a row. U.S. housing starts slipped 0.2% in April to an annual rate of 1.72 million units. U.S. housing permits fell 3.2% in April to an annual rate of 1.82 million units.

See: Looking to buy a house? Builders are betting you’ll have to rent instead

Investors also are expecting comments from Philadelphia Fed President Patrick Harker at 4 p.m. Eastern Time.

Which companies are in focus?

• Tesla Inc.
  TSLA,
  -6.84%
  shares were 7.7% lower Wednesday after the E&P ESG Index dropped the EV maker from its widely followed index with a focus on better environmental, social and governance practices.

• Shares of AutoWeb Inc.
  AUTO,
  -17.72%
  were down 16% after plunging 65% Tuesday. The drop came after the company warned investors that it had “substantial doubt” in its ability to continue as a “going concern” given its troubled cash position.

• Doximity Inc.
  DOCS,
  -9.76%
  shares fell almost 10% toward all-time lows, following an earnings report that projected an unexpected revenue decline in the current quarter.

How are other assets trading?

• The yield on the 10-year note
  TMUBMUSD10Y,
  2.897%
   declined 8 basis points to 2.89%. Yields and debt prices move in opposite directions.

• Oil futures fell, with the U.S. benchmark
  CL.1,
  -3.19%
  closing down 2.5% at $109.59 a barrel.

• Gold futures 
  GC00,
  -0.15%
   closed down 0.2% to settle at $1,815.90 an ounce.

• In European equities, the Stoxx Europe 600 
  SXXP,
  -1.14%
   fell 1.1%, while London’s FTSE 100  
  UKX,
  -1.07%
   also lost 1.1%.

• In Asia, the Shanghai Composite 
  SHCOMP,
  -0.25%
   ended 0.3% lower. Meanwhile, the Hang Seng Index 
  HSI,
  +0.20%
  finished higher by 0.2% and Japan’s Nikkei 225 
  NIK,
  +0.94%
   rose 0.9%.

—-Barbara Kollmeyer contributed reporting to this article.