Dow futures fall 120 points after Target and Lowe's report disappointing earnings.

After poor quarterly reports from retail giants Target (NYSE:TGT) and Lowe's (NYSE:LOW), U.S. equities are expected to begin lower on Wednesday, giving up some of the previous session's gains (NYSE:LOW).

The Dow Futures contract was down 120 points, or 0.4 percent, at 7 a.m. ET (1100 GMT), while the S&P 500 Futures were down 20 points, or 0.5 percent, and the Nasdaq 100 Futures were down 90 points, or 0.7 percent.

The major market indexes on Wall Street finished higher on Tuesday, helped by a robust April retail sales data, indicating that consumers have so far weathered the significant spike in inflation, which is good news for retailers reporting results this week.

The blue-chip Dow Jones Industrial Average jumped more than 400 points, or 1.3 percent, while the broad-based S&P 500 rose 2% and the tech-heavy Nasdaq Composite gained 2.8 percent.

The retail industry has had a big week, with Walmart (NYSE:WMT) posting dismal results on Tuesday due to growing expenses, and Home Depot (NYSE:HD) reporting record sales and raising its 2022 estimate.

Target's first-quarter profit was halved, and the company warned of a greater margin cut due to increased gasoline and freight costs on Wednesday. Lowe's also reported a larger-than-expected dip in same-store sales, as demand for its equipment and construction supplies moderated from epidemic highs.

In other news, Netflix (NASDAQ:NFLX) will be in the spotlight as the streaming behemoth reported it had let off roughly 150 individuals, or about 2% of its US and Canadian staff, due to sluggish growth.

Investors will also get a fresh peek at the housing sector, with April data on house starts and construction permits expected early Wednesday.

On Tuesday, US Federal Reserve Chairman Jerome Powell said that the US central bank will raise interest rates as high as necessary to combat rising inflation.

The Federal Reserve hiked interest rates by 50 basis points earlier this month, the second rise in 2022, and the central bank is largely projected to raise rates by the same amount next month.

Oil prices rose on Wednesday on expectations that China may finally be able to contain a long-running COVID-19 epidemic, possibly raising demand from the world's top oil importer.

On Tuesday, Shanghai, China's primary financial center, reached the three-day mark with no new COVID-19 cases outside quarantine zones, laying out preparations to break a more than six-week lockdown.

According to statistics from the American Petroleum Institute, crude oil stocks in the United States unexpectedly decreased by 2.4 million barrels for the week ending May 17.

Investors are now waiting for confirmation from the US Energy Information Administration's crude oil supply data, which is expected later today.

By 7 a.m. ET, U.S. crude futures were up 1% to $110.70 per barrel, while the Brent contract was up 0.7 percent to $112.67.

Gold futures lost 0.2 percent to $1,815.55 per ounce, while the EUR/USD fell 0.3 percent to 1.0518.

Dow futures fall 120 points after Target and Lowe's report disappointing earnings.