The Dow Jones Industrial Average dropped 570.17 points, or 1.49%, to 37,815.92, the S&P 500 shed 80.49 points, or 1.57%, at 5,035.68 and the Nasdaq Composite lost 325.26 points, or 2.04%, to 15,657.82
U.S. equity markets closed sharply lower on Tuesday, joining their global peers in the monthly loss column as investors await key economic data and the Federal Reserve convenes its two-day policy meeting.
Gold dipped, the dollar bounced back and benchmark U.S. Treasury yields inched up after the U.S. Labor Department reported hotter-than-expected first-quarter employment cost growth, which is unlikely to alter the Federal Reserve’s restrictive stance.
The sell-off was triggered by the higher-than-expected employment cost index, according to Jay Hatfield, portfolio manager at InfraCap in New York. And investors are positioning ahead of what is likely to be a hawkish press conference after the Fed meeting.
All three major U.S. indexes logged their first monthly percentage losses since October.
We have reached new highs in the S&P this year, but there comes a time when a market needs to digest those gains, according to Sam Stovall, chief investment strategist of CFRA Research in New York. The old ‘sell in May’ adage might have come true a month early.
The FOMC meets on Tuesday for its monetary policy meeting, which is expected to culminate on Wednesday with a decision to leave the Fed funds target rate in the 5.25% to 5.50% range.
The accompanying statement, as well as Fed Chair Jerome Powell’s subsequent press conference, will be assessed for clues regarding the central bank’s expected path forward with respect to interest rate cuts.
We know the Fed is going to be hawkish, and there are going to be questions about rate hikes, Hatfield said. That will be the money answer, depending on how much he pushes back on that.
Analysts now see aggregate S&P 500 Q1 earnings growth of 6.0% year-on-year, up from the 5.1% estimate, according to LSEG data.
The Dow Jones Industrial Average dropped 570.17 points, or 1.49%, to 37,815.92. The S&P 500 shed 80.49 points, or 1.57%, at 5,035.68 and the Nasdaq Composite lost 325.26 points, or 2.04%, to 15,657.82.
European stocks closed lower as a string of bleak earnings dampened investor sentiment due to upbeat economic data and the increased possibility that the ECB could cut interest rates in June.
The pan-European STOXX 600 index shed 0.68% and MSCI’s gauge of stocks across the globe lost 1.23%.
Emerging market stocks shed 0.61%. MSCI’s broadest index of Asia-Pacific shares outside Japan ended 0.41% lower, while Japan’s Nikkei gained 1.24%.
