Wall Street ends down after Target outlook

Wall Street's main indices have ended lower 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.

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

Retail stocks slumped broadly on Wednesday, including declines of more than eight per cent in shares of Macy's Inc and Best Buy Co Inc and a seven per cent drop for Foot Locker. The S&P 500 consumer discretionary sector shed 1.5 per cent.

Micron Technology shares dropped 6.7 per cent 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 per cent and the Philadelphia SE Semiconductor index sank 4.3 per cent.

"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.

The Dow Jones Industrial Average fell 39.09 points, or 0.12 per cent, to 33,553.83, the S&P 500 lost 32.94 points, or 0.83 per cent, to 3,958.79 and the Nasdaq Composite dropped 174.75 points, or 1.54 per cent, 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 per cent, while staples gained 0.5 per cent.

Despite the sales warning from Target, data showed US 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 three per cent after the home improvement company raised its annual profit forecast.

Stocks had staged a big rally in the past month, after softer-than-expected inflation data raised hopes the US 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 defences and not a Russian strike, Poland and NATO said, easing global concern that the war in Ukraine could spill across the border.