US stocks tumbled overnight to close out a losing month after higher-than-expected wage data raised new inflation concerns ahead of the Federal Reserve’s rate decision on Wednesday.
The Labor Department has stated that the employment cost index, a measure of wages and benefits, grew 1.2 per cent in the first quarter of the year, above the 1 per cent consensus estimate.
While market forecasts suggest no alteration in the rate, there's anticipation for a hawkish stance from Chairman Jerome Powell.
The S&P 500 dropped 1.57 per cent, the Dow Jones closed 1.49 per cent lower and the Nasdaq finished the day 2.04 per cent lower.
Despite the April setback, the S&P 500 is still up more than 20 per cent from its low last October as investors bet the economy could withstand higher rates and piled into artificial intelligence plays like Nvidia. Data in the past month raised questions about whether stubborn inflation was weakening the economy while keeping the Fed in a restrictive mode. McDonald’s in its quarterly report Tuesday warned about a more selective consumer due to higher prices.
Nvidia traded into the red on Tuesday, losing 1.5 per cent in the session and falling 4 per cent this month. The favourite AI play of investors was up for five months straight before this month.
After the bell, Amazon reported better-than-expected earnings and revenue for the first quarter, with profit more than tripling, driven by significant growth in advertising and cloud computing, leading to a surge in stock value during extended trading. The results showcase the company's continued focus on efficiency and profitability amidst ongoing cost-cutting measures.
Following the Fed’s decision, investors will next need to grapple with the April jobs report Friday.
Turning to US sectors, all closed in the Red. Health was the best performer, recording the fewest losses. Energy was the worst, closing down almost 3 per cent lower.
Futures
The SPI futures are pointing to a 1.2 per cent fall.
Currency
One Australian dollar at 7.30am was buying 64.75 US cents.
Commodities
Gold has dropped 2.32 per cent. Silver has lost 3.64 per cent. Copper has fallen 2.39 per cent. Oil is down 0.85 per cent.
Figures around the globe
European markets closed lower. London’s FTSE shed 0.04 per cent, Frankfurt lost 1.03 per cent, and Paris closed 0.99 per cent lower.
Turning to Asian markets, Tokyo’s Nikkei gained 1.24 per cent, Hong Kong’s Hang Seng added 0.09 per cent and China’s Shanghai Composite closed 0.26 per cent lower.
The Australian share market closed 0.35 per cent higher at 7,664.08.
Ex-dividends
DRA Global Limited (ASX:DRA) is paying 11 cents unfranked
NB Global Corporate Income Trust (ASX:NBI) is paying 1.2179 cents unfranked
Dividends payable
Brickworks Ltd (ASX:BKW)
Harvey Norman Holdings Ltd (ASX:HVN)
New Hope Corp Ltd (ASX:NHC)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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