Shares open lower after Tuesday’s rally

Shares of retailer Target fell 24% after the company posted quarterly results that missed analysts’ expectations as supply chain costs and inflationary pressures cut profits. If such a fall lasts through the trading day, it will mark the worst day for the company’s stock development since the market crash in October 1987.

Walmart shares fell 2.5%, extending Tuesday̵[ads1]7;s fall of 11% after the retailer reported being pressured by higher food prices and other rising costs.

TJX shares rose 8.9% after the low-priced clothing and home fashion retailer said earnings rose 10% in the first quarter.

Equities have largely fallen in recent weeks as investors reflected on the global economic outlook, central banks’ plans to tame inflation, geopolitical tensions and China’s zero-covid strategy. The culmination of factors has increased market volatility. Even with Tuesday’s rally, the S&P 500 is down around 15% this year.

In front of investors’ minds is decades of high inflation in the United States, where much decision-makers are willing to tighten financial conditions to curb it and what it means for economic growth. Federal Reserve Chairman Jerome Powell said on Tuesday that the central bank’s decision to fight inflation should not be questioned, even if it requires pushing up unemployment.

“Our expectation is that growth will begin to slow in the coming months,” said Salman Ahmed, global macro chief of Fidelity International, adding that he expects the Fed’s actions to help curb inflation. “Then the next step for the Fed will be to focus on the growth shock.”

The mix of concerns affecting the markets has led Ahmed to take a more cautious investment approach in recent weeks, he said.

Investors are also monitoring whether Russia’s war against Ukraine could further strengthen geopolitical tensions. Finland and Sweden formally applied for NATO membership on Wednesday, a move that, if approved, will fundamentally change the security landscape in Northern Europe.

In the bond markets, the return on the benchmark index for 10-year government bonds rose to 2.985% from 2.969% on Tuesday. Returns and prices move the other way around.

Brent oil, the international benchmark for oil, increased 1% to $ 113.01 a barrel. Oil prices have been very reactive in recent months to both Russia’s war on Ukraine, which could disrupt supplies, and shutdowns in major Chinese cities that suppress demand. The Shanghai government has begun preparing the city for reopening.

Abroad, the pan-continental Stoxx Europe 600 fell 0.8%. The British pound fell about 0.6% against the dollar after recent figures showed that annual inflation in the UK reached a four-decade high of 9% in April as higher energy prices fed through household electricity bills.

In Asia, new data showed that Japan’s economy declined during the first three months of this year, as restrictions on a resurgence of Covid-19 infections held back consumption spending. Despite the closed Japanese Nikkei 225 0.9% higher.

South Korea’s Kospi and Hong Kong’s Hang Seng increased 0.2% every Wednesday. China’s Shanghai Composite fell nearly 0.3 percent.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

Corrections and reinforcements
Federal Reserve chief Jerome Powell said on Tuesday that the central bank’s decision to fight inflation should not be questioned. An earlier version of this article incorrectly stated that Mr. Powell had made the statement on Wednesday. (Corrected May 18.)