Wall Street pointed toward declines before the market opened Wednesday after Target reported a huge decline in profits on the same day that the U.S. posts retail sales data for July.
Futures for the S&P 500 slipped 0.8% and futures for the Dow fell 0.6%.
Target slid almost 2% after reporting a nearly 90% plunge in second quarter profits as it was forced to slash prices to clear unwanted inventories.
Target warned earlier this summer that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans as the pandemic eased.
The U.S. Commerce Department will release July retail sales data Wednesday, with economists surveyed by FactSet expecting modest 0.2% growth from June, when sales rose 1%.
Analysts warned major risks remain, such as surging COVID-19 cases in some countries in Asia, along with worries about global inflation and China's policies to curb infections.
Expectations of economic growth in China and the U.S. will likely remain key to gauging recession fears. Chinas zero-COVID policy is still an important headwind for global growth, said Anderson Alves at ActivTrades.
Japan's benchmark Nikkei 225 added 1.2% to finish at 29,222.77. Australia's S&P/ASX 200 rose 0.3% to 7,127.70. South Korea's Kospi lost 0.5% to 2,521.84. Hong Kong's Hang Seng added 0.5% to 19,922.45, while the Shanghai Composite edged up 0.5% to 3,292.53.
In Europe, Frances CAC 40 fell 0.6% in midday trading, while Germanys DAX tumbled 1.2%. Britains FTSE 100 shed 0.4%
In New Zealand, the central bank raised its benchmark interest rate from 2.5% to 3% as it continues trying to battle inflation. The Reserve Bank of New Zealand said domestic spending had remained resilient in the face of local and global headwinds, and employment was robust. Lower oil prices had given some reprieve from inflation, the bank said, but it needed to continue tightening monetary conditions until inflation was brought back to its target range of 1% to 3%.
New Zealands inflation is running at 7.3% and unemployment at 3.3%.
In Japan, government data showed a trade deficit in July for the 12th consecutive month. Soaring oil prices and the sliding yen were key factors. Japan imports almost all its oil.
New COVID-19 cases have been surging in recent weeks as restrictions on economic activities ease. Ambulances have had to circle for hours looking for hospitals that could accept patients. But domestic travel and shopping appear to be back, boosting consumption.
The market's latest gyrations came as traders cautiously reviewed mostly encouraging financial results from major U.S. retailers. U.S. stocks had their best month in a year and a half in July and the winning streak has been continuing into August, partially on hopes that inflation is easing. The latest government report on consumer prices showed that inflation essentially stalled from June to July.
The latest results from retailers show that spending remains solid, even as American consumers face the hottest inflation in 40 years. Wall Street has been concerned that higher prices on everything from food to clothing could eventually stunt the economy's main engine of growth, consumer spending.
The recent retail reports are capping off the latest round of corporate earnings, which have been closely watched by investors trying to determine inflation's impact on businesses and consumers, while trying to gauge how the U.S. Federal Reserve will react.
The central bank is raising interest rates in an effort to slow down economic growth and rein in inflation, though it risks hitting the brakes too hard and veering the economy into a recession.
The Fed in July raised its benchmark interest rate by three-quarters of a point for a second-straight time. On Wednesday, Wall Street will get more details on the process behind that decision when the Fed releases minutes from that meeting. Investors expect a half-point increase at the Fed's upcoming meeting in August, according to CME's FedWatch tool.
In energy trading, benchmark U.S. crude inched down 6 cents to $86.47 a barrel. U.S. crude oil prices fell 3.2% Tuesday. Brent crude, the international standard, lost 47 cents to $91.87 a barrel.
In currency trading, the U.S. dollar edged up to 135.08 Japanese yen from 134.22 yen. The euro cost $1.0166, down from $1.0171.