The Dow Jones Industrial Average fell by 3.6% and the broader S&P 500 by 4% on Wednesday after a series of retailers posted disappointing financial results.

Shares in Target, one of the biggest retailers in the US, plunged by 26% at one stage after the company pointed to rising cost pressures, stoking investor fears around inflation.

Target's quarterly results also badly missed analysts' expectations, sending its share price crashing down to its worst day since 1987.

Other retailers echoed Target's sentiment, saying their profits were hit by slow sales, supply chain issues and spiralling costs.

Shares of Dollar Tree, Dollar General and Costco Wholesale also took a sharp tumble.

The sell-off marked a sharp reverse from Tuesday, when markets rebounded after a strong performance by key technology stocks - shares that were credited with leading the US stock market recovery from the shock of the early pandemic.

However, a 40-year high for US inflation has spooked investors and damaged the so-called growth stocks to the extent that the Nasdaq entered correction territory in January and has continued to suffer since.

It fell by 4.7% on Wednesday - its second-worst day of the year - with Apple falling by more than 5%.

"Inflation is hitting every aspect of an earnings report, whether it be the transportation side or supply-chain disruption," Nick Giacoumakis, president and founder of NEIRG Wealth Management, told the Wall Street Journal.

"Customers are no longer buying the more expensive items they would typically buy. All this trickles through to an earnings report."

The sell-off extended to Asia trading on Thursday with Japan's Nikkei and the Hang Seng in Hong Kong both down by around 3%.

In London the FTSE 100, which shed 1% on Wednesday, was forecast to open just over 0.5% lower.