The Dow Jones Industrial Average and other U.S. stock indexes fell Tuesday morning after strong labor data increased speculation that the Federal Reserve won’t cut interest rates anytime soon.
The Bureau of Labor Statistics reported a 1.2% increase in the Employee Cost Index, a measure of wages and benefits, higher than the 0.9% increase seen in the fourth quarter of 2023. This index is one of a growing number of inflationary reports released this year. Investors are seeking insight into future rate cuts as the Federal Open Market Committee (FOMC) meeting begins on Tuesday.
Meanwhile, Series I bonds will pay 4.28% annual interest from May 1 through October 2024, the Department of the Treasury announced. The latest I bond rate, which is linked to inflation, has fallen from 5.27% (annually) offered since November and is slightly lower than the 4.3% rate from May 2023.
The Dow dropped 299 points, or about 0.8%, to 38,095 shortly before midday. The S&P 500 lost 0.6% and the Nasdaq fell 0.7%.
The yield on the 10-year Treasury jumped nearly 4.66%.
A busy week of corporate earnings is underway, with major companies, including Amazon, Apple, and Novo Nordisk, still to come.
More layoffs at Tesla
Just two weeks after Tesla laid off at least 14,000 workers across the world, CEO Elon Musk is planning layoffs for hundreds of additional staffers — including the bulk of the company’s Supercharger team and several executives.
Musk wrote in an email sent to senior Tesla executives late Monday night, first reported by The Information, that he wanted to be “absolutely hardcore” about reducing Tesla’s workforce. He added that, beginning at 10 a.m. on Tuesday, he will ask any executive “who retains more than three people who don’t obviously pass the excellent, necessary and trustworthy test” to resign.
The stock dropped to 4.3% in the mid-morning.
McDonald’s shares recover from price drop
A Big Mac and fries doesn’t appear to be capturing the attention of consumers for now. McDonald’s posted lower-than-expected sales for the first quarter of 2024. That slowdown was in part due to consumers in the U.S. tightening their wallets — and others staging boycotts related to the Israel-Hamas war. After seeing a drop in pre-market trading Tuesday, the shares rebounded, with a nearly 1% gain in mid-morning.
Bitcoin drop continues
Bitcoin continued to shed its value as Hong Kong’s Bitcoin and Ether ETFs failed to impress investors on their debut. The top cryptocurrency fell below $61,000 on Monday morning, dropping over 2%. Ether, the second-largest cryptocurrency, followed suit, plummeting over 4% in the past 24 hours to $3,000.
– William Gavin and Francisco Velasquez contributed to this article.
