US stocks ended lower on Tuesday (Apr 30) as markets weighed economic data showing rising labor costs and deteriorating consumer confidence on the day of a key Federal Reserve policy meeting to decide the direction of interest rates.

Data showed on Tuesday that US labour costs rose by a more-than-expected 1.2 per cent last quarter, indicating an uptick in wage pressures. A survey also found that US consumer confidence worsened in April, dropping to its lowest level in more than one-and-a-half years.

The reports came a day before the Federal Reserve Open Market Committee (FOMC) ends its two-day meeting, with investors widely expecting the central bank to leave interest rates unchanged.

Most Magnificent Seven stocks finished lower, including Tesla, Alphabet, Nvidia, Microsoft and Amazon.

“We’re still in an environment where the knee-jerk reaction is to extrapolate any warmer data into firmer inflation and more hawkish reaction from the Fed,” said Garrett Melson, portfolio strategist at Natixis Investment Managers in Boston.

“But nothing has changed: growth is still strong, labour markets are holding up, and ultimately we’re taking a little bit of breather in the disinflation process,” Melson added.

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Money markets are pricing in just about 31 basis points (bps) of rate cuts this year, down from about 150 bps estimated at the start of 2024, according to LSEG data.

According to preliminary data, the S&P 500 lost 79.92 points or 1.56 per cent to end at 5,036.25 points, while the Nasdaq Composite lost 325.26 points or 2 per cent to 15,664.13. The Dow Jones Industrial Average fell 574.08 points or 1.47 per cent to 37,823.57.

Shares of GE HealthCare shrank after its first-quarter revenue missed analyst estimates, 3M gained after posting a better-than-expected quarterly profit.

Drugmaker Eli Lilly jumped after it raised its full-year profit forecast. PayPal rose after raising its full-year adjusted profit forecast.

Of the 265 companies in the S&P 500 that have reported earnings to date for the first quarter, 79.2 per cent beat analyst estimates, compared with the long-term average of 67 per cent, according to LSEG I/B/E/S data. REUTERS