The stock market took a battering Wednesday, extending the past few months' losses as inflation lashes the economy and the Federal Reserve hikes interest rates.

The Dow Jones Industrial Average lost more than 1,100 points, or 3.5%, the worst single-day loss since the COVID-19 pandemic struck in the spring of 2020. The tech-heavy Nasdaq plummeted by about 4.7%, and the S&P 500 closed down more than 4%.

Major retailers Target and Walmart posted earnings that were below forecast expectations, with both companies blaming the drops on higher fuel and labor costs. Target shed more than a quarter of its value in a single day, while Walmart was off by about 7.3% Wednesday after losing nearly 11.4% the day before.

The big-box retailers’ earnings reports signaled that inflation is hurting the economy, even as the Fed rushes in to tighten its monetary policy.

SEN. SULLIVAN LOOKS TO CURB POWER OF GIANT INVESTMENT FIRMS EMBRACING ESG

The average price for a gallon of gasoline across the United States hit a record $4.57 on Wednesday, according to AAA. Average prices also surpassed $4 in all 50 states and Washington, D.C., for the first time.

“Any company that relies on households and discretionary purchases will likely suffer this quarter because a lot of discretionary income has been funneled to food and energy prices,” Jack Ablin, a founding partner of Cresset Capital, told CNBC.

Not only is inflation a concern, but so is the possibility of a recession.

Many economists see the Fed being too far behind the curve on bringing down inflation. Consumer prices are increasing at the quickest pace since the early 1980s, and the central bank has had to raise rates quicker and more aggressively than thought just months ago, fostering concerns that it could slow the economy so much it tumbles into a recession.

Additionally, Treasury Secretary Janet Yellen on Wednesday raised the specter of stagflation, which is when inflation is rising at the same time that economic growth and the labor market are struggling, in remarks to reporters.

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

“The economic outlook globally is challenging and uncertain, and higher food and energy prices are having stagflationary effects, mainly depressing output and spending and raising inflation all around the world,” she said.

The Dow Jones is down more than 14% since the start of the year, the Nasdaq is off nearly 28%, and the S&P 500 has fallen about 18.2%.