Shoppers are concerned about "the high and persistent inflation they've been experiencing, particularly in food and energy," Target CEO Brian Cornell said during a conference call with analysts, though he stressed that consumers remain "resilient" and continue to benefit from pent-up savings and excitement around seeing friends and family again.

Traffic to stores remains robust, rising almost 4% year-over-year, and May is off to a healthy start, he added.

But analysts poring over the results said they represented a sea change after the boom era that followed Covid lockdowns.

Flush with stimulus checks and money they'd stashed away while staying at home, Americans spent with abandon.

"If they're having these types of issues keeping up with the rapidly changing environment, who isn't?"

Scott Mushkin of R5 Capital said after Target's earnings that he now sees the environment for retailers as uninvestable, at least in the short-term.

"Inflation and costs are out of control, consumer spending is swinging wildly and, at least in our minds, fear is growing around how long the consumer spending can hang in there," he wrote in a research note.

Target's stock price drop on Wednesday seems to indicate that investors are bracing for "the idea that this shoe is likely to drop."

"This leaves us to ponder if the unprecedented boom of the last two years will be followed by an unprecedented bust, the scope of which we can't even imagine," Mushkin said.

The controversial hedge fund Melvin Capital is shutting down

When an army of day traders coordinating on Reddit set their sights on GameStop shares early last year, many hoped to punish a single man: Gabe Plotkin of Melvin Capital.

The hedge fund had made a bet that shares of GameStop would fall.

It got battered when the stock soared about 1,700% in a single month.

Now, as the market plunges, Plotkin has announced that Melvin Capital is shutting down.

In a letter to investors seen by Reuters, he said that the last 17 months had been "an incredibly trying time."

Melvin Capital had $12.5 billion in assets at the start of 2021, and was seen as one of the most successful hedge funds on Wall Street.

It lost 23% in the first four months of 2022, a person familiar with the fund's finances told Reuters.

Plotkin said Wednesday that he had begun the process of exiting positions and would stop charging management fees at the beginning of June.