Wall Street’s main indexes fell on Tuesday amid widespread caution ahead of the Federal Reserve’s interest rate decision and higher-than-expected labor costs that suggested sustained inflation.
The Dow Jones Industrial Average fell 428 points, or 1.1%, to $37,597, the S&P 500 fell 1% and the Nasdaq fell 1.2%. All three stock indexes are expected to record monthly losses for the first time in six years.
U.S. labor costs rose in the first quarter on the back of higher wages and benefits, confirming a spike in inflation at the start of the year and likely delaying an expected interest rate cut in late 2024.
The statistics come ahead of a two-day Federal Open Market Committee (FOMC) meeting during the day that will focus on interest rate decisions and Chairman Powell’s remarks after the event.
“The real problem for the Fed is that changes in labor costs can take time to impact consumer prices, and the market may be dissatisfied with the Fed’s decision-making process,” said Jeffrey Roach, chief economist at LPL Financial. “It’s encouraging people to do something,” he said.
Money markets largely expect the central bank to keep interest rates unchanged on Wednesday, but the rate cut this year will be limited to about 31 basis points (bps), down from about 150 basis points (bps) expected in early 2024, according to LSEG data. It has been revised downward from basis points (bps). .
On the revenue front, medical device company GE Healthcare fell 11.2% after missing first-quarter sales expectations, while US conglomerate 3M rose 4.6% after posting a better-than-expected quarterly profit.
Eli Lilly rose 5% after the drugmaker raised its full-year profit forecast.
PayPal rose 3.1% after the payments giant raised its full-year adjusted profit forecast.
According to LSEG I/B/E/S data, of the 265 S&P 500 companies that have reported first-quarter results so far, 79.2% have exceeded analyst estimates, compared to the long-term average of 67%. Ta.
U.S. stocks had a tough April as rising inflation significantly reduced bets on interest rate cuts, while rising tensions in the Middle East and earnings updates also added to volatility.
Meanwhile, U.S. consumer confidence worsened in April, falling to its lowest level in more than a year and a half.
Tesla jumped 15% in premarket trading after reports that Chief Executive Officer Elon Musk fired two senior executives and plans to lay off hundreds more employees. It fell by 5.2%.
