Chibuike Ogu
NEW YORK (Reuters) – U.S. stocks traded lower on Tuesday as markets weighed economic data showing rising labor costs and weakening consumer confidence ahead of a key Federal Reserve policy meeting that will decide the direction of interest rates. .
Data showed on Tuesday that U.S. labor costs rose 1.2% last quarter, more than expected, indicating increasing pressure on wages. The survey also showed that US consumer confidence worsened in April, falling to its lowest level in more than a year and a half.
The reports came a day before the start of a two-day meeting of the Federal Open Market Committee (FOMC), with investors widely expecting the central bank to leave interest rates unchanged.
Ten of 11 sectors traded lower, led by energy, consumer discretionary, materials, industrials and technology stocks. Shares in the utilities and healthcare sectors rose after recouping losses earlier in the session.
Shares of most of the Magnificent Seven companies also fell. Tesla (NASDAQ:) fell 5%, Alphabet (NASDAQ:) fell 1.1%, Nvidia (NASDAQ:) lost 1%, Microsoft (NASDAQ:) lost 1.6%, and Amazon (NASDAQ:) fell by 0.6%.
“We’re still in a situation where the knee-jerk reaction is to extrapolate any warmer data to more resilient inflation and a more aggressive Fed response,” said Garrett Melson, portfolio strategist at Natixis Investment Managers in Boston.
“But nothing has changed: economic growth is still strong, labor markets are holding up, and ultimately we have a bit of a break from deflation,” Melson added.
Money markets are forecasting a rate cut of about 31 basis points (bps) this year, down from about 150 bps forecast at the start of 2024, according to LSEG data.
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At 2:16 p.m., down 365.34 points, or 0.95%, at 38,020.75, the S&P 500 was down 41.94 points, or 0.82%, at 5,074.23, also down 165.79. , or 1.04%, to 15,817.29.
GE HealthCare (NASDAQ:) shares fell 13.3% after its first-quarter revenue missed analysts’ estimates, while 3M shares rose 3.3% after reporting better-than-expected quarterly profit.
Shares of pharmaceutical company Eli Lilly (NYSE:) jumped 6% after it raised its full-year profit forecast. PayPal (NASDAQ:) shares rose 2% after raising its full-year adjusted earnings forecast.
McDonald’s (NYSE:) shares recovered from early losses to rise 0.1% after missing quarterly profit forecasts for the first time in two years.
Of the 265 S&P 500 companies reporting first-quarter earnings to date, 79.2% beat analysts’ estimates, compared with the long-term average of 67%, according to LSEG I/B/E/S.
On the NYSE, decliners outnumbered advancers by a 3.76-to-1 ratio. On the Nasdaq, 1,225 rose and 2,880 fell as decliners outnumbered advancers by a 2.35-to-1 ratio.
The S&P 500 posted 18 new 52-week highs and 6 new lows, while the Nasdaq posted 45 new highs and 99 new lows.