It was a rough day for the Dow and other indexes as hotter-than-expected labor data increased speculation that the Federal Reserve would not be cutting interest rates anytime soon. The Federal Open Market Committee (FOMC) meeting began today, and the interest rate decision will be made Wednesday afternoon.
The U.S. Bureau of Labor Statistics reported a 1.2% increase in its employee cost index, a measure of wages and benefits — higher than the 0.9% increase seen in the fourth quarter of 2023. The index is one of a growing number of inflationary reports released this year.
Meanwhile, Series I bonds will pay 4.28% annual interest from May 1 through October 2024, the U.S. 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 570 points, or about 1.4%, to 37,815 as the market closed. The S&P 500 lost 1.5% and the Nasdaq fell 2%.
Major companies such as Amazon, Super Micro Computer, and Advanced Micro Devices will release their quarterly earnings after the closing bell.
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 that he wanted to be “absolutely hardcore” about reducing Tesla’s workforce, The Information reported. He added that on Tuesday morning he would begin asking 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 5.5% by closing time.
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.
The shares were down 0.19% by closing time.
Coca-Cola pops up
Coca-Cola’s consumers are making it pop. The beverage company reported better-than-expected first-quarter earnings on Tuesday, thanks in part to an increase in its prices. The Atlanta-based company said increased pricing contributed to the rise in sales, attesting that the increases were “driven by the impact of inflationary pricing” as well as “pricing actions in the marketplace,” according to its earnings report.
Shares were up 0.5% after the market closed.
MicroStrategy reports loss of $53 million
MicroStrategy reported a net loss of $53.1 million, or 3.09 a share, in its first-quarter earnings report but plans to buy more Bitcoin later in the year. In the first quarter, the firm suffered a $191.6 million loss on the impairment of digital assets, an increase of ten times from the first quarter of 2023. According to the company’s filing, revenue also fell 5.5% compared to the first quarter of 2023, to $115.2 million.
Following the news, the stock of the business analytics software company plunged over 17% by the end of the day.
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.