US chem shares fall amid stock market fears of inflation
HOUSTON (ICIS)–US-listed shares of chemical companies were trading down sharply midday on Wednesday as the general stock market posted even steeper declines as retailers complained about rising costs.
The table shows the major indices followed by ICIS.
|Dow Jones Industrial Average||31,591.66||-1,062.93||-3.26%|
|Dow Jones US Chemicals Index||840.87||-20.2||-2.35%|
|S&P 500 Chemicals Industry Index||842.11||-20.25||-2.35%|
Stocks fell after major US retailer Target reported its Q1 earnings.
Its operating margin rate was 5.3%, well below expectations because of the company’s efforts to reduce excess inventory as well as higher costs for freight and transportation, the company said.
“Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations and well below where we expect to operate over time,” said CEO Brian Cornell.
For the second quarter, the operating margin should remain low, varying widely from 5.3%, the company said. For all of 2022, the operating income margin rate should be 6%.
For comparison, Target expects its long-term margin to be at least 8%.
Rising costs and excess inventory could slow down demand for goods – although most chemical companies had not noted any demand destruction when they discussed their first-quarter earnings.
Attempts to lower inflation by the Federal Reserve could slow down the economy as well.
It raised its benchmark interest rate by half a point at its last meeting in May, and similar hikes are expected for the rest of the year.
The following table shows the US-listed shares of chemical companies followed by ICIS.
|$ Change||% Change|
|Axalta Coating Systems||25.56||-0.91||-3.44|
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