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Nasdaq leads stocks lower as recent momentum stalls out

U.S. stocks finished lower across the board on Wednesday, with tech leading markets lower as recent momentum stalled out.

When the closing bell rang on Wall Street, the Nasdaq was off 1.2%, the S&P 500 down 0.7%, while the Dow lost 0.5%.

A meme rally that had broken out in recent days fizzled, with shares of Bed, Bath & Beyond the only riser amid this resurgent theme in markets.

Retail earnings, retail sales data, and an inflation check from the U.K. all combined to weigh on investor sentiment on Wednesday.

Key retail sales data for July out Wednesday morning showed sales growth was flat from June to July, missing expectations for a 0.1% increase. Excluding autos and gas, sales rose 0.7% in July.

Sales at gasoline stations fell 1.8% in July, an expected decline given the drop witnessed in gas prices over the last few months.

On the earnings side, results from Target showed the company's quarterly earnings missed expectations as its key same-store sales measures rose 2.6% against expectations for a 2.8% increase in the second quarter.

These results come after Walmart (WMT) reported a better-than-expected quarter on Tuesday, lifting some investor hopes consumer spending may remain durable in the face of rising prices.

On a call with reporters early Wednesday, Target emphasized its optimism for the upcoming holiday season, and said its needed inventory adjustments weighted on second quarter results.

Target shares fell 2.6% on Tuesday.

Shares of TJ Maxx parent TJX (TJX) rose nearly 3% on Wednesday, reversing earlier losses that followed the company's quarterly report out in the morning that showed second quarter sales missed estimates.

Inflation data from the U.K. out Wednesday also showed consumer prices rose 10.1% in July, with some banks now expecting inflation in the U.K. to hit 15% next year. Though recent data suggests a moderation in U.S. inflation pressures, European consumers and businesses do not appear out of the woods just yet.

Elsewhere, investors will continue to keep a close eye on energy markets, with WTI crude oil futures settling at their lowest level since January 25 on Tuesday. WTI futures rose about 1.2% on Wednesday.

The meme stock rally continued early Wednesday, though shares of Bed, Bath & Beyond (BBBY) — which gained 11.7% on Wednesday after a 29% rally on Tuesday — were the only notable gainers as this momentum also fizzled out of the market.

Shares of meme darlings AMC (AMC) and GameStop (GME), for instance, finished the day off 14% and 3.5%, respectively.

After the market close on Tuesday, Ryan Cohen's RC Ventures disclosed it holds call options on 1.6 million shares of Bed, Bath & Beyond, with strike prices between $60-$80. Shares were trading at around $25 early Wednesday.

Signage is seen at a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly
Signage is seen at a Bed Bath & Beyond store in Manhattan, New York City, U.S., June 29, 2022. REUTERS/Andrew Kelly (Andrew Kelly / reuters)

Elsewhere in market oddities, Elon Musk was at it again late Tuesday, tweeting that he was going to buy English football club Manchester United (MANU) before clarifying the tweet was a joke. Man U has started its Premier League season with two embarrassing losses and currently sits in last place.

Bloomberg later reported the Glazer family, which owns the football club, would consider selling a minority stake.

The S&P 500 on Tuesday also traded up to its 200-day moving average, a long-term technical indicator that broadly points to a security's overall trend. The S&P's 200-day is currently declining and stands at around 4,323, a level the index hit on Tuesday and immediately traded lower from before closing at 4,305.

Wednesday's decline showed this reversal indicates bulls, who have had control of the market for the last few months, will have some work to do to re-establish a broader uptrend in the stock market.

This post will be updated.

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