4:10pm: Stocks plunge as investors brace for Fed meeting
Markets ended Tuesday on a sour note, marking the conclusion of the worst month in 2024 for Wall Street.
The S&P 500 and Nasdaq Composite plummeted around 1.6% and 2%, respectively, while the Dow Jones Industrial Average fell approximately 1.5%.
Investors are eagerly awaiting the Federal Reserve's interest rate decision amid new labor data showing a 1.2% increase in the employment cost index from December to March, signaling potential inflationary pressures.
All eyes will be on Amazon's earnings report Tuesday after Microsoft and Alphabet's impressive results boosted optimism.
Elsewhere, PayPal's stock surged after strong first-quarter earnings, while shares of Eli Lilly and Company rose on an increased sales forecast. Conversely, 3M Company's stock jumped following robust quarterly profits, despite announcing a dividend cut. McDonald's shares remained flat following a revenue and same-store sales miss.
On the flip side, Warner Bros Discovery faced a sharp decline in its stock price amid uncertainties surrounding NBA rights renewal negotiations.
12:15pm: Winning streak over?
The three major stock indexes all traded lower as investors weighed up new labor and consumer confidence data ahead of Amazon’s highly anticipated earnings report due after the closing bell.
New data from the Bureau of Labor Statistics showed that the employment cost index, which measures compensation and benefits, increased 1.2% from December to March, marking the highest increase in a year.
Wages and salaries increased by 1.1% and benefit costs increased 1.1%.
Meanwhile, US consumer confidence fell sharply in April to its lowest level since 2022, according to the Conference Board’s index.
It came in at 97, below expectations of 104 and down from March’s reading of 103.1.
At midday, the Dow Jones and the Nasdaq both traded down 0.9% at 38,044 points and 15,842 points. The S&P 500 was 0.8% lower at 5,077 points.
9:59am: Stocks in the red
Wall Street is finishing a gloomy month of April on the back foot, opening in the red this morning, with losses led by the Dow Jones.
New York's blue-blooded blue chips have fallen 226 points or 0.59% to 38,159.4 in the first half-hour of trading.
The broader S&P 500 and the more tech focused Nasdaq Composite have dropped 0.2%.
8.23am: Looking ahead to the Fed
The US Federal Reserve begins its two-day policy meeting today, with Jerome Powell and the rest of the Federal Open Market Committee not expected to do anything to interest rates when they announce their decision tomorrow, May 1, and for some months to come.
Here's what Bank of America thinks: "In our view, planets keep aligning to the high-for-longer narrative.
"Inflation has consistently surprised on the upside this year. The combination of strong spending, particularly in services, and signals that supply tailwinds are fading, align with the high-for-longer story and explain why markets focused on PCE beat rather than the GDP miss.
"Back in January, rates markets where pricing 150bp of Fed cuts for this year. Since then,US rates have been selling off, including after today’s data release, and the market is currently pricing just one 25bp cut in December, in line with our US team call."
The bank said its view of a high-for-longer "as the path of least resistance" is now coming to be accepted by markets.
"However, US elections remains a key risk to the outlook."
Federal Reserve officials have made it clear in recent weeks that they are not planning to cut rates at their upcoming meeting, which concludes tomorrow, 1 May.
As a result, markets are pricing just a 2.5% chance of an easing, based on the CME’s FedWatch Tool.
Investors will be seeking guidance on the Fed’s latest views on the recent inflation disappointments, said strategists at UBS.
"The tone of comments from policymakers – both in the Fed statement following the decision and in chair Powell’s subsequent press conference – will help determine if investors continue to expect rates to start coming down at the September meeting."
7.55am: Thoughts on US equities
Some thoughts from Citigroup and UBS, reviewing recent Wall Street equity moves.
"After three weeks of falling markets, the S&P bounced and ended the week up 2.7% while other markets followed," Citi strategists said.
"This turn was not caused by or followed with a change in investor flows, ie investors were not buying the dip in either futures or ETFs.
"Instead, investors took risk off the table by unwinding profitable bearish positions.
"The bounce cannot continue on de-risking flows alone and must be supported by new bullish inflows for the rally to continue."
UBS's chief investment officer Mark Haefele said the past week was the strongest for the S&P 500 since November, helped by robust results from Microsoft and Alphabet.
"The announcements from Microsoft and Alphabet have also helped restore confidence in the growth outlook for AI and tech, which had been shaken in recent weeks by fears of slowing demand for semiconductor chips and chipmaking equipment.
"Investors will be hoping that the momentum is maintained in results this week from Apple and Amazon."
7.22am: Nasdaq set to slide, PayPal and Lilly impress
US stock markets are being called lower by futures traders as the two-day Federal Reserve meeting begins and
The tech titans of the Nasdaq are expected to lead the slight declines, with futures down 0.16% currently, while the Dow Jones and S&P 500 are both currently trading less than 0.1% lower.
It's a busy earnings day today, with lots of well-known names including many consumer-facing groups.
McDonald’s shares are down almost 1% in pre-market trading after the fast-food chain’s quarterly earnings rose less than Wall Street analysts had forecast, with same-store sales rose 2.5% but were a french-fry short of expectations.
Coca-Cola was up almost 1% as it raised full-year revenue guidance after quarterly sales and earnings that topped expectations. The beverage giant also raised its outlook for its full-year organic revenue.
Molson Coors profits fizz nearly three times higher, beating Street forecasts, on revenue that jumped 11% but its shares were little moved.
Walmart slipped 0.4% as it plans to shut 51 health centres in the coming quarter.
PayPal was up 6% as the digital payment group lifted its full-year outlook after quarterly earnings and revenue beat forecasts.
Eli Lilly traded 7% higher pre-market after earnings beat expectations thanks to strong sales of its diabetes and weightloss drugs, which are actually the same drug but marketed separately as Mounjaro and Zepbound. Although the higher sales are likely to lead to shortages over the coming months, it led the drug giant to hike its full-year guidance.
Tesla (down 2%), Apple, Meta Platforms and Nvidia are all in the red in premarket trading, despite no real news.