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Wall Street’s main indexes ended lower on Wednesday as a grim outlook from Target spurred fresh concerns about retailers heading into the crucial holiday season, while semiconductor shares slid after Micron’s supply cut. The TSX also ended lower, pressured by declines in the energy and materials sectors, as investors took in the latest Canadian inflation data.

Shares of Target Corp tumbled 13.1% after the big-box retailer forecast a surprise drop in holiday-quarter sales.

Retail stocks slumped broadly, including declines of over 8% in shares of Macy’s Inc and Best Buy Co Inc and a 7% drop for Foot Locker. The S&P 500 consumer discretionary sector shed 1.5%.

Micron Technology shares dropped 6.7% after the company said it would reduce memory chip supply and make more cuts to its capital spending plan. The S&P 500 information technology sector fell 1.4% and the Philadelphia SE Semiconductor index sank 4.3%.

“The biggest sector issue is Target’s earnings and what that means for retail and consumer spending in general. I think that has kind of set the tone for the market,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

The Micron news “is certainly causing some tech investors to take some of these short term profits off the table because it still appears like the fundamentals are still not great in the tech space,” Carlson said.

In Canada, the S&P/TSX composite index ended down 36.82 points, or 0.2%, at 19,957.96.

Still, the index has gained 2.7% since the beginning of the month and is on track for its second straight month of gains as investors welcome signs of decade-high inflation cooling.

The Toronto market’s energy sector fell 2.3% as oil prices settled 1.5% lower at $85.59 a barrel concerns over rising COVID-19 cases in China.

The materials group, which includes precious and base metals miners and fertilizer companies, lost 1.3%, while technology ended 0.7% lower.

Consumer staples was a bright spot, rising 1.6%. It was helped by a gain of 2.3% for Loblaw Cos Ltd after the retailer raised its annual earnings forecast.

Shares of Restaurant Brands International Inc ended 7% higher, helping drive the consumer discretionary sector to a 1.3% gain.

Industrials also gained ground, rising 1.4%.

Data on Wednesday showed Canada’s annual inflation rate holding steady at 6.9% in October, matching analyst forecasts, while core inflation measures were mixed, leaving markets betting on a smaller rate hike at the Bank of Canada’s next meeting.

Money markets have fully priced in a 25 basis point interest rate hike by the BoC at its next policy announcement on Dec. 7 and see a 35% chance of a larger hike of 50 basis points, up from about 30% before the data.

The central bank hiked by 50 basis points last month, lifting its policy rate to a 14-year high of 3.75%.

Canadian government bond yields were mixed across a more deeply inverted curve. Yield curve inversions often indicate a looming recession.

The 10-year eased 6.2 basis points to 3.059%, while it was trading 7.7 basis points further below the 2-year rate to a gap of nearly 80 basis points. That was its largest in Refinitiv data going back to 1994.

On Wall Street, the Dow Jones Industrial Average fell 39.09 points, or 0.12%, to 33,553.83, the S&P 500 lost 32.94 points, or 0.83%, to 3,958.79 and the Nasdaq Composite dropped 174.75 points, or 1.54%, to 11,183.66.

Gains in defensive areas such as utilities and consumer staples helped mitigate the S&P 500′s losses. The utilities sector rose 0.9%, while staples gained 0.5%.

Despite the sales warning from Target, data showed U.S. retail sales increased more than expected in October as households stepped up purchases of motor vehicles, suggesting consumer spending picked up early in the fourth quarter.

Elsewhere in retail, shares of Lowe’s rose 3% after the home improvement company raised its annual profit forecast.

Stocks had staged a big rally over the past month, after softer-than-expected inflation data raised hopes the U.S. Federal Reserve could get less aggressive with interest rate hikes.

“The market had seen a good run-up from those lows and had continued to move higher,” said George Catrambone, head of Americas trading at DWS Group. “The market has a lot to think about and digest as we get into year end.”

Fed Governor Christopher Waller, an early and outspoken inflation hawk, said he is now “more comfortable” with smaller rate increases going forward after data showed price increases slowing.

Investors also were watching geopolitical tensions. A missile that hit Poland was probably a stray fired by Ukraine’s air defenses and not a Russian strike, Poland and NATO said, easing global concern that the war in Ukraine could spill across the border.

Declining issues outnumbered advancing ones on the NYSE by a 1.96-to-1 ratio; on Nasdaq, a 2.23-to-1 ratio favored decliners. The S&P 500 posted 3 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 71 new highs and 133 new lows. About 10.5 billion shares changed hands in U.S. exchanges, compared with the 12.2 billion daily average over the last 20 sessions.

Reuters, Globe staff

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