Stocks fall on disappointing earnings and inflation data before Fed decision: Live updates

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 S&P 500 edged down by 0.34% while the Nasdaq Composite lost 0.43%. The Dow Jones Industrial Average fell 168 points, or 0.44%.

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.

“Bottom line. [this is] not a number that will incline the Fed to change their ‘there is no rush to ease’ stance but not a number that will induce a ‘we need to raise rates’ view either,” said Tom Fitzpatrick, managing director for global market insights at R.J. O’Brien and Associates.

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.

“When you look at the size and the scope and the scale of the rally off the October lows, and then you layer on top of it, the stickiness of inflation in the end, … I wouldn’t be surprised to see some dampener on the market for a little period of time,” Dan Greenhaus, chief strategist at Solus Alternative Asset Management, told CNBC’s “Closing Bell.”

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 busiest week of corporate earnings is set to continue with Amazon and Apple reporting their quarterly results Tuesday and Thursday, respectively. 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.