Stocks fall on Wall Street as markets weigh strong wages data, Federal Reserve meets By Reuters

Chibuike Ogu

NEW YORK (Reuters) – U.S. stocks traded lower on Tuesday as markets weighed economic data showing rising labor costs and falling consumer confidence on the eve of a key Federal Reserve policy meeting to decide the direction of interest rates.

Data released Tuesday showed U.S. labor costs rose 1.2% more than expected last quarter, indicating increased wage pressures. U.S. consumer confidence deteriorated in April, falling to its lowest level in a year and a half, according to a survey.

The report comes a day before the Federal Reserve’s Open Market Committee (FOMC) begins its two-day meeting. Investors were widely expecting the central bank to keep interest rates on hold.

Ten of the 11 industries declined, led by stocks in the energy, consumer discretionary, materials, industrials, and technology sectors. Stocks in the utilities and healthcare sectors were trading higher after recouping early losses.

The Magnificent Seven stocks also fell. Tesla (NASDAQ:) was down 5%, Alphabet (NASDAQ:) was down 1.1%, Nvidia (NASDAQ:) was down 1%, Microsoft (NASDAQ:) was down 1.6%, and Amazon (NASDAQ:) was down 0.6%.

“We’re still in a situation where warm data is encouraging inflation to firm up and a hawkish response from the Fed,” said Garrett Melson, portfolio strategist at Natixis Investment Managers.

“But nothing has changed. Growth remains strong, the labor market is holding up, and ultimately we are taking a breather on the inflation elimination process,” Melson added.

Financial markets are pricing in a rate cut of about 31bps this year, down from about 150bps estimated in early 2024, according to LSEG data.

At 2:16 p.m., it was down 365.34 points, or 0.95%, at 38,020.75, while the S&P 500 was down 41.94 points, or 0.82%, at 5,074.23 and down 165.79 points, or 1.04%, at 15,817.29.

GE Healthcare (NASDAQ:) shares fell 13.3% after first-quarter sales missed analyst estimates, while 3M rose 3.3% after posting better-than-expected quarterly profits.

Pharmaceutical company Eli Lilly (NYSE:) rose 6% after raising its full-year profit forecast. PayPal (NASDAQ:) rose 2% after raising its full-year adjusted revenue forecast.

McDonald’s (NYSE:) rebounded from early losses and rose 0.1% after missing quarterly profit estimates for the first time in two years.

Of the 265 S&P 500 companies that have reported first-quarter earnings to date, 79.2% have beaten analyst estimates, compared with the long-term average of 67%, according to LSEG I/B/E/S data.

On the NYSE, declining issues outnumbered advancing issues by a 3.76 to 1 ratio. On Nasdaq, declining stocks outnumbered advancing stocks by a ratio of 2.35:1, with 1,225 stocks rising and 2,880 stocks falling.

The S&P 500 recorded 18 new 52-week highs and 6 new lows, while the Nasdaq recorded 45 new highs and 99 new lows.