S&P 500 Ends Winning Streak Amid Inflation Concerns

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The S&P 500 index closed lower on Tuesday, ending a five-month winning streak as investors grappled with concerns over inflation fueled by rising wages. Here’s a roundup of the day’s market movements and key events:

Market Performance: At the closing bell, the Dow Jones Industrial Average dropped 570 points, or 1.1%, while the S&P 500 fell 1.5%, and the NASDAQ Composite declined 2%. The S&P 500 posted a 3% loss for the month, highlighting the extent of the recent downturn.

Inflation Worries: Data showing an increase in U.S. labor costs in the first quarter, driven by rising wages and benefits, heightened concerns about inflation. The Employment Cost Index rose 1.2% last quarter, contributing to a 4.2% year-on-year increase in labor costs. These figures added to recent reports indicating a buildup of price pressures in the economy.

Federal Reserve Meeting: The Federal Reserve commenced its two-day policy-setting meeting, with expectations that it would maintain its benchmark interest rate within the current range of 5.25%-5.50%. Fed Chair Jerome Powell’s remarks following the meeting are anticipated for insights into the central bank’s stance on inflation and the rate outlook.

Earnings Highlights: Several companies reported earnings, with notable performances from Eli Lilly, 3M, Coca-Cola, and McDonald’s. Eli Lilly and 3M stocks surged after beating analyst expectations for the first quarter, while Coca-Cola shares declined despite reporting strong quarterly earnings and raising its full-year outlook. McDonald’s stock slipped after weaker-than-expected Q1 earnings, attributed in part to lower-than-expected same-store sales amid boycott calls linked to the Middle East conflict.

Corporate Developments: Paramount Global saw a decline in its stock price after CEO Bob Bakish stepped down amid ongoing discussions over a potential tie-up with Skydance Media. In contrast, HSBC shares rose following a stronger-than-expected Q1 profit announcement and the news of Chief Executive Noel Quinn’s retirement. PayPal shares also gained after the company posted better-than-anticipated first-quarter results.

Bitcoin Volatility: Bitcoin prices dipped below $60,000, marking a more than 14% loss for the month and signaling the largest monthly decline since November 2022. The cryptocurrency faced pressure from a wave of fund outflows, contributing to the ongoing volatility in the digital asset market.

As the market continues to navigate inflation concerns, earnings reports, and corporate developments, investors remain vigilant for signals from the Federal Reserve and economic data that could shape future market trends.

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