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Data showed on Tuesday that U.S. labor costs rose by a
more-than-expected 1.2% last quarter, indicating an uptick in
wage pressures. A survey also found that U.S. consumer
confidence worsened in April, dropping to its lowest level in
more than 1-1/2 years.
The reports came a day before the Federal Reserve Open Market
Committee (FOMC) ends its two-day meeting, with investors widely
expecting the central bank to leave interest rates unchanged.
Most Magnificent Seven stocks finished lower, including Tesla,
Alphabet, Nvidia, Microsoft, and Amazon.
"We're still in an environment where the knee-jerk reaction is
to extrapolate any warmer data into firmer inflation and more
hawkish reaction from the Fed," said Garrett Melson, portfolio
strategist at Natixis Investment Managers in Boston.
"But nothing has changed: growth is still strong, labor markets
are holding up, and ultimately we're taking a little bit of
breather in the disinflation process," Melson added.
Money markets are pricing in just about 31 basis points (bps) of
rate cuts this year, down from about 150 bps estimated at the
start of 2024, according to LSEG data.
According to preliminary data, the S&P 500 lost 79.92 points, or
1.56%, to end at 5,036.25 points, while the Nasdaq Composite
lost 325.26 points, or 2.00%, to 15,664.13. The Dow Jones
Industrial Average fell 574.08 points, or 1.47%, to 37,823.57.
Shares of GE HealthCare shrank after its first-quarter revenue
missed analyst estimates, 3M gained after posting a
better-than-expected quarterly profit.
Drugmaker Eli Lilly jumped after it raised its full-year profit
forecast. PayPal rose after raising its full-year adjusted
profit forecast.
Of the 265 companies in the S&P 500 that have reported earnings
to date for the first quarter, 79.2% have beat analyst
estimates, compared with the long-term average of 67%, according
to LSEG I/B/E/S data.
(Reporting by Chibuike Oguh in New York; additional reporting by
Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by
Aurora Ellis)
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