Stocks on Wall Street fell on Wednesday as a global stock market rally faded and downbeat earnings from discount retailer Target added to concerns about inflation and supply chain congestion.

By morning in New York, the benchmark S&P 500 was down 2.7%, while the tech-heavy Nasdaq Composite was down 3%.

Shares of Target plunged 24% after retailers warned of falling profit margins, higher shipping, wages and fuel costs and disruption to logistics. It comes a day after Walmart, the world’s largest brick-and-mortar retailer, cut its earnings forecast, signaling that it too was faltered by broad inflation trends.

“Market sentiment will be more focused on weaker margins and lower earnings,” said Nadège Dufossé, head of cross-asset strategy at fund manager Candriam.

“The economy is starting to deteriorate [economic] growth story,” said Michael Metcalfe, head of global markets macro strategy at State Street. “And it’s starting to [corporate] income. “

The fall in Target’s shares put it on track for its biggest one-day drop since 1987, and Walmart also hit a dismal milestone in the previous session. Walmart slipped further Wednesday, as did other consumer-focused companies including Dollar Tree and Best Buy.

The S&P rose 2 percent on Tuesday, briefly rebounding after global stocks suffered their worst weekly losses since 2008.

Analysts warned that it was a bear market rally, with stock market downtrends briefly easing from time to time, as investors remained nervous about rising interest rates exacerbating a global slowdown.

The S&P, which leads other global stock markets, eschewed a bear market last week, defined as a 20% drop from its recent high.

The subdued market sentiment comes as major central banks reversed supportive policies by fixing borrowing costs near zero at the start of the pandemic and buying government bonds at unprecedented rates. The Fed has raised interest rates by 0.75 percentage points since March and has signaled further sharp hikes.

Candice Bangsund, portfolio manager at Fiera Capital, said: “The weakness in equities has been largely driven by tighter financial conditions, but what has not yet been reflected is the potential for slower growth, leading to slower earnings.”

“For some time we have believed that earnings forecasts were too optimistic given the inflationary environment that could squeeze margins.”

Elsewhere, the Stoxx 600 in Europe fell 1.1%. Hong Kong’s Hang Seng rose 0.2%, while Tokyo’s Nikkei 225 closed up 0.9%.

In currencies, the pound fell 0.6% to $1.24 after data showed British inflation hit a four-year high of 9% in April, adding to worries about economic weakness.

Brent crude, the oil benchmark, fell 1.8% to $109.88 a barrel.