US Stocks Dip as Hot Labor Market Data and Fed Decision Loom

US stocks

US stocks are on the verge of breaking a five-month winning streak as escalating losses on Tuesday were spurred by unexpectedly strong labor data and anticipation of the Federal Reserve’s next moves on interest rates, alongside impending earnings from Inc. (NASDAQ:AMZN).

The S&P 500 and the tech-focused Nasdaq Composite both declined, dropping approximately 0.8% and 1% respectively, after previously closing with modest gains. The Dow Jones Industrial Average  fell by about 0.9%, while yields on the 10-year Treasury saw a rise of about 5 basis points, reaching nearly 4.67%.

Early Tuesday, the Bureau of Labor Statistics released data showing that the employment cost index, a gauge of wage and benefit expenses, rose 1.2% from December to March—marking the most substantial quarterly increase in a year. This followed a 0.9% rise at the end of 2023. The figures, reflecting increases of 1.1% in both wages and benefits, continue to fuel concerns that high labor costs are contributing to persistent inflation.

Amid these developments, major stock indexes are poised to conclude April with their most significant losses of 2024, following a challenging mid-month period. However, there has been some recovery momentum over the past week as investors seek progress.

The Federal Reserve is expected to maintain interest rates at high levels during its two-day meeting starting Tuesday, as market participants closely monitor for any policy adjustments.

Additionally, Amazon’s financial performance, set to be announced post-market, is drawing significant attention following impressive earnings from Microsoft Corporation (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) that have raised expectations for a robust season for the “Magnificent Seven” tech giants. These results have simultaneously highlighted Wall Street’s growing concerns over substantial investments in AI technology.

Other notable earnings expected include Coca-Cola Company (NYSE:KO) and McDonald’s Corporation (NYSE:MCD), with Advanced Micro Devices (NASDAQ:AMD) and Starbucks Corporation (NASDAQ:SBUX) also scheduled to report after the closing bell.

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