Dow loses 1.5 percent
US investors are getting cold feet ahead of the Fed’s decision
April 30, 2024, 11:03 p.m
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Unfavorable price data and the upcoming decisions and statements from the US Federal Reserve are clouding the mood on Wall Street, and the indices are clearly losing ground. The winners of the day include the pharmaceutical company Eily Lilly and Paypal.
Ahead of tomorrow’s meeting of the US Federal Reserve, Wall Street fell, with a surge in sales at the end of the trading day pushing the indices to daily lows. The Dow Jones Index the standard values closed 1.5 percent lower at 37,815 points. The technology-heavy one Nasdaq fell two percent to 15,657 points. The broad one S&P 500 lost 1.6 percent to 5,035 jobs.
The tense mood before the interest rate decision by the important monetary authorities was reinforced by the latest data on the US labor market. Labor costs in the USA rose by 1.2 percent in the first quarter; experts had expected an average of one percent. This fueled concerns about persistent wage inflation, which could deter central bankers from cutting interest rates soon. “The conclusion from these numbers is that the Fed will be very reluctant to cut interest rates in 2024,” said Hugh Johnson of Hugh Johnson Economics. “Although interest rate cuts are not off the table yet, the report certainly will not be helpful to the Fed.”
Stock marketers are now eagerly awaiting the official labor market report from the US government on Friday. They hope that this will provide further information about the Fed’s next steps, which is trying to keep inflation in check with increased interest rates and cool down the hot job market.
Oil prices fall due to Middle East talks
Rising oil production in the USA and hopes of a ceasefire between Israel and Hamas depressed prices on the oil market. The US variety WTI lost 1.4 percent to $81.52 per barrel (159 liters). The North Sea variety Brent fell 0.7 percent to $87.81 a barrel. U.S. crude oil production rose to 13.15 in February from 12.58 million barrels per day in the previous month, according to the U.S. Department of Energy. The latest attempts at negotiations have strengthened hopes of a ceasefire in the region, which is important for oil production. “Traders believe that some of the geopolitical risk is being removed from the market,” said Dennis Kissler, manager at financial company BOK Financial.
The accounting season continued for companies. The US pharmaceutical company Eli Lilly continued its rise thanks to its popular diabetes and weight loss medicines. The share price rose by around six percent. After a jump in sales and profits in the first quarter, Lilly increased its annual targets on Tuesday. In 2024, sales of $42.4 to $43.6 billion and adjusted earnings per share of $13.50 to $14 are expected, the company announced. Previously, sales of 40.4 to 41.6 billion and earnings per share of 12.20 to 12.70 dollars were forecast.
Paypal and 3M asked
Cost reductions and robust customer demand also supported the US payment service provider Paypal more confident. Instead of stagnation, the board now expects an increase in adjusted profit by a “mid to high single-digit percentage” in 2024, as the group announced. Even as lower-income groups cut back on purchases, most Americans still wanted to shop online, eat out and travel despite inflation, it said. Paypal notes advanced 1.4 percent.
A surprisingly strong quarterly result also drove shares up 3M at. The titles climbed by 4.7 percent. Higher prices and lower costs offset the industrial group’s weak sales in the last quarter.
On the other hand, the medical technology company’s papers, among other things, flew out of the depots GE Healthcare, which slipped 14.3 percent. The group recorded sales below analyst expectations in the first months of 2024 – due, among other things, to weak demand in China.