NEW YORK (AP) — Wall Street headed for more losses at the open following the previous day’s rout amid persistently high inflation and its potential effect on corporate profits and consumer spending.

Futures for the S&P 500 and Dow Jones Industrial Average slid 0.9% Thursday before the bell.

Shares in Europe and Asia fell sharply following plunging U.S. markets.

Germany’s DAX was down 1.6% at midday, while the CAC 40 in Paris declined 1.7% and Britain’s FTSE 100 shed 2.1%.

On Wednesday, the Dow sank more than 1,100 points, or 3.6%. The S&P 500 had its biggest drop in nearly two years, shedding 4%, and the tech-heavy Nasdaq fell 4.7%.

The benchmark index is now down more than 18% from the record high it reached at the beginning of the year. That’s just shy of the 20% decline that’s considered a bear market.

“The sentiment in the market is highly negative as traders and investors are largely concerned about an economic downturn and soaring inflation,” Naeem Aslam of Avatrade said.

Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy have caused investors to reconsider the prices they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers.

The last bear market happened just two years ago, but this would still be a first for those investors that got their start trading on their phones during the pandemic. For years, thanks in large part to extraordinary actions by the Federal Reserve, stocks often seemed to go in only one direction: up. Now, the familiar rallying cry to “buy the dip” after every market wobble is giving way to fear that the dip is turning into a crater.

The Federal Reserve is trying to temper the impact from the highest inflation in four decades by raising interest rates. Many other central banks are on a similar track. But the Bank of Japan has stuck to its low interest rate policy and the gap between those benchmark rates of the world’s largest and third-largest economies has pushed the dollar’s value up against the Japanese yen.

Japan reported a trade deficit for April as its imports ballooned 28%. The shift reflects surging energy costs amid the war in Ukraine and a weakening of the yen against the U.S. dollar.

The Nikkei 225 in Tokyo lost 1.9% to 26,402.84 and the Hang Seng in Hong Kong dropped 2.5% to 20,120.60. In South Korea, the Kospi shed 1.3% to 2,592.34, while Australia’s S&P/ASX 200 gave up 1.7% to 7,064.50.

The Shanghai Composite index reversed earlier losses, gaining 0.4% to 3.096.96.

On Wednesday, retailer Target lost a quarter of its value after reporting earnings that fell far short of analysts’ forecasts. Inflation, especially for shipping costs, dragged its operating margin for the first quarter to 5.3%. It had been expecting 8% or higher.

The company warned that its costs for freight this year would be $1 billion higher than it estimated just three months ago.

The report comes a day after Walmart said its profit took a hit from higher costs. The nation’s largest retailer fell 6.8%, adding to its losses from Tuesday.

Target and Walmart each provided anecdotal evidence that inflation is weighing on consumers, saying they held back on purchasing big-ticket items and changed from national brands to less expensive store brands.

The weak reports stoked concerns that stubbornly rising inflation is putting a tighter squeeze on a wide range of businesses and could cut deeper into their profits.

Other big retailers also have racked up hefty losses.

The data are not entirely consistent. On Tuesday, the market cheered an encouraging report from the Commerce Department that showed retail sales rose in April, driven by higher sales of cars, electronics, and more spending at restaurants.

Investors worry the Fed could trigger a recession if it raises interest rates too high or too quickly. Worries persist about global growth as Russia’s invasion of Ukraine puts even more pressure on prices for oil and food while lockdowns in China to stem COVID-19 cases worsens supply chain problems.

In other trading, benchmark U.S. crude oil declined $1.27 to $108.32 per barrel in electronic trading on the New York Mercantile Exchange. It dropped $2.81 to $109.59 on Wednesday.

Brent crude, the basis for pricing for international trading, slipped 71 cents to $108.40 per barrel.

The dollar fell to 127.92 Japanese yen from 128.20 yen late Wednesday. The euro strengthened to $1.0514 from $1.0464.