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Stocks traded into the red Tuesday after higher-than-expected wage data raised fresh inflation concerns ahead of the Federal Reserve’s rate decision on Wednesday. McDonald’s shares fell after disappointing earnings.
The Dow Jones Industrials stumbled 315.7 points to break for lunch at 38,070.39.
The S&P weakened 36.41 points to 5,097.76.
The NASDAQ dropped 134.35 points to 15,848.73.
Stocks are headed for their first losing month since October as rate cut expectations dropped significantly from where they were at the start of the year. The 30-stock index is on pace for a more than 3% loss in April. The S&P 500 and NASDAQ Composite are headed for declines of more than 2%, each.
The busiest week of corporate earnings is set to continue with Amazon reporting its quarterly results on Tuesday, and Apple on Thursday.
The April jobs report is also expected at the end of this week, preceded Wednesday by releases on job openings and private sector employment growth.
In early earnings news, McDonald’s missed quarterly earnings estimates as same-store sales fell short of expectations. Higher prices have scared away some low-income customers.
There’s plenty of economic news on the docket this week, with Fed policymakers convening for their two-day policy meeting on Tuesday. The central bank is broadly anticipated to keep interest rates steady, but traders worry Fed Chair Jerome Powell’s post-meeting comments will lean more hawkish after the recent spate of hotter inflation reports.
The employment cost index, a measure of wages and benefits, added 1.2% in the March quarter, above the 1% consensus estimate from economists polled by Dow Jones. Treasury yields jumped following the data.
Markets are pricing in just one quarter percentage point cut in 2024, as persistent inflation and a resilient economy raise the likelihood the Fed will stay higher for longer.
Prices for the 10-year Treasury sagged, lifting yields to 4.66% from Monday’s 4.62%. Treasury prices and yields move in opposite directions.
Oil prices fell 55 cents to $82.08 U.S. a barrel.
Gold prices tumbled $50.90 to $2,306.80.
