By Chibuike Ogu
NEW YORK (Reuters) – The U.S. on Tuesday weighed economic data showing rising labor costs and deteriorating consumer confidence ahead of a key Federal Reserve policy meeting that will decide the direction of interest rates. Stocks ended lower.
U.S. labor costs rose more than expected by a faster-than-expected 1.2% last quarter, data showed on Tuesday, showing rising wage pressures. The survey also found that U.S. consumer confidence worsened in April, falling to its lowest level in more than a year and a half.
The report came a day before the Federal Reserve’s Open Market Committee (FOMC) concluded a two-day meeting, with investors widely expecting the central bank to keep interest rates on hold.
All 11 sectors of the S&P 500 ended lower, led by stocks in the energy, consumer discretionary, materials, industrials, and technology sectors.
The Magnificent Seven stocks, including Tesla, Alphabet, Nvidia, Microsoft, and Amazon, also ended lower. Amazon shares rose 3.1% in after-hours trading after the company announced first-quarter earnings that beat analysts’ expectations.
“We’re still in an environment where there’s a knee-jerk reaction where any positive economic data translates into stronger inflation or a more hawkish response from the Fed,” said Garrett Melson, portfolio strategist at Natixis Investment Managers in Boston. “It’s there,” he said.
“But nothing has changed. Growth remains strong, the labor market is holding up, and we are finally taking a little breather in the deflation process,” Melson added.
Money markets are pricing in only about 31 basis points (bps) of interest rate cuts this year, down from about 150 basis points (bps) expected in early 2024, according to LSEG data.
The Dow Jones Industrial Average fell 570.17 points, or 1.49%, to 37,815.92, the S&P 500 fell 80.48 points, or 1.57%, to 5,035.69, and the Nasdaq Composite Index fell 325.26 points, or 2.04%, to 15,657.82.
During the month, the S&P 500 index fell 4.2%, the Nasdaq index fell 4.4%, and the Dow Jones Industrial Average fell 5%. The S&P 500 and Nasdaq posted their biggest monthly declines since September 2023, and the Dow posted its biggest decline since September 2022.
GE Healthcare’s stock fell 14.3% after its first-quarter sales fell short of analysts’ expectations, while 3M rose nearly 5% after posting a quarterly profit that beat expectations.
Pharmaceutical company Eli Lilly rose about 6% after raising its full-year profit forecast. PayPal rose 1.4% after raising 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.
Declining issues outnumbered advancing issues on the New York Stock Exchange by a 4.6-to-1 ratio. On the Nasdaq, declining issues outnumbered advancing issues by a 2.56-to-1 ratio, with 1,183 advancing issues and 3,028 declining issues.
The S&P 500 has recorded 18 new highs and 7 new lows in 52 weeks, and the Nasdaq has recorded 53 new highs and 119 new lows.
Trading volume on U.S. exchanges was 11.3 billion shares, compared to an average of 11.0 billion shares traded over the past 20 trading days.
(Reporting by Chibuike Oguh in New York; Additional reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Aurora Ellis)
