Stock market today: Nasdaq sinks 2% as stocks plummet to end worst month of 2024

US stocks closed in a sea of red on Tuesday to close Wall Street's worst month of 2024, as new labor data came in hotter than expected while investors await the Federal Reserve's upcoming interest rate decision and digest strong earnings from Amazon (AMZN).

The S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) each nosedived to end the trading day, falling roughly 1.6% and 2%, respectively. The Dow Jones Industrial Average (^DJI) fell about 1.5% while the yield on the 10-year Treasury (^TNX) jumped about 7 basis points to trade near 4.69%.

According to new data released by the Bureau of Labor Statistics early Tuesday, the employment cost index, which measures compensation and benefits, increased 1.2% from December to March — the highest increase in a year — after rising 0.9% at the end of 2023.

Wages and salaries increased by 1.1% over that same three-month period, while benefit costs also increased by 1.1%. The data adds to ongoing concerns that persistently high wages are keeping inflation levels elevated.

Investors are bracing for policymakers to hold interest rates at historically elevated levels at the Fed's two-day meeting, which began Tuesday.

Amazon's results after the bell showed a beat on both the top and bottom lines as investors cheered a strong showing from its cloud computing segment. Shares popped as much as 5% in after hours trading.

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A tale of two earnings: Amazon, Starbucks

Tue, April 30, 2024 at 4:39 p.m. EDT, Alexandra Canal

It was a tale of two earnings stories on Tuesday as results from Amazon (AMZN) and Starbucks (SBUX) highlighted the after-hours calendar for investors.

Amazon shares jumped as much as 5% in after hours trading after the tech giant topped Wall Street estimates on both the top and bottom lines and showed strong results from its cloud computing segment. Sales of Amazon Web Services (AWS) jumped 17% year over year. Yahoo Finance's Hamza Shaban breaks down the results here.

Starbucks shares sank about 10% on Tuesday after the coffee giant missed expectations across the board with revenue, earnings, and same store sales growth falling short of estimates. Revenue fell 13% compared to the prior year period while same-store sales growth was negative at -4% versus the 1.46% growth Wall Street expected. Yahoo Finance's Brooke DiPalma has more on the disappointing report here.

Stocks close in sea of red

Tue, April 30, 2024 at 4:03 p.m. EDT, Alexandra Canal

US stocks closed significantly lower on Tuesday with the Nasdaq leading the declines.

Both the S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) nosedived to end the worst month of the year, falling roughly 1.6% and 2%, respectively.

The Dow Jones Industrial Average (^DJI) fell about 1.5% while the yield on the 10-year Treasury (^TNX) jumped about 7 basis points to trade near 4.69%.

Wage cost increase 'yet another data point' to keep the Fed patient

Tue, April 30, 2024 at 3:30 p.m. EDT, Josh Schafer

New data out Tuesday from the Bureau of Labor Statistics showed that compensation costs increased 1.2% in the first quarter, above the prior quarter's 1% increase and higher than the 0.9% economists had expected, per Bloomberg data.

Wells Fargo senior economist Sarah House reasoned that all else equal, Tuesday's pickup in wage costs isn't "the end of the world" for the Fed. But it is another drop in the bucket weighing on the market's hopes for interest rate cuts ahead of Federal Reserve Chair Jerome Powell's next update on monetary policy slated for Wednesday afternoon.

"It is yet another data point that suggests the inflation slowdown that began this time last year stalled out in the first quarter of 2024," House wrote in a research note following the release.

The slowdown in wage growth comes as inflation's decline has also stalled, leaving little wiggle room for the Fed to lean dovish on Wednesday, economists have argued.

"There's not much for the Fed to hang its hat on in terms of recent inflation data," Deutsche Bank US economist Brett Ryan told Yahoo Finance on Tuesday.

He added the Powell's message on Wednesday is likely to be that "elevated inflation would be met with holding rates steady."

Pot stocks move higher on move to reclassify marijuana in US

Tue, April 30, 2024 at 2:46 p.m. EDT, Alexandra Canal

Pot stocks surged on Tuesday after the Associated Press reported the US Drug Enforcement Administration (DEA) will move to reclassify marijuana as a less dangerous drug.

To note, this would not legalize marijuana for recreational use but would recognize the medical uses of cannabis in addition to acknowledging that the odds of abusing marijuana are less compared to other dangerous drugs in the country, according to the report.

"Among all the potential changes to the regulatory landscape currently being considered, rescheduling was the most meaningful and needed to pass after the HHS recommendation this past August," Wedbush analysts Gerald Pascarelli and Antoine Legault wrote in reaction to the news.

"The move will benefit all operators who have been severely impacted by a constrained capital markets environment and the ability to raise incremental cash," the analysts continued. "While today's announcement does not legalize cannabis federally, [the move] is a great first step and it should provide momentum to an industry that has consistently been let down by lawmakers."

Tilray (TLRY), Canopy Growth (CGC), and Aurora Cannabis (ACB) shares jumped on the news, rising roughly 33%, 42%, and 30%, respectively.

GenAI to boost GDP, 'change world economy': Oxford Economics

Tue, April 30, 2024 at 2:00 p.m. EDT, Alexandra Canal

Generative artificial intelligence "will change the world economy." At least that's what a new report from Oxford Economics predicated on Tuesday.

"Generative AI has the potential to substantially improve the medium-term growth outlook for the economy," wrote Innes McFee, chief global economist at Oxford Economics. "It arrives at a perfect moment — labor is going to be less supportive of growth as aging dynamics hit home and productivity is flagging."

Big Tech giants like Microsoft (MSFT), Alphabet (GOOG, GOOGL), and Amazon (AMZN) are heavily investing in artificial intelligence with investors closely eyeing the progress of AI developments.

Oxford said generative AI could automate tasks and lead to increased innovation, which could help boost GDP by between 1.8% and 4.0% by 2032 — depending on adoption speed.

"Although the economy wide-gains will arrive eventually, they won't be immediate," McFee warned. "Developments in human capital and the infrastructure around GenAI will be needed to unlock the full benefits. And in line with the historical experience of reaping the benefits from innovation, that's likely to take years."

Ahead of that timeline, it's possible the economy could see increased layoffs as demand over AI-related investments increases cost pressures.

Still, McFee said generative AI could serve as a disinflationary force for the global economy in the medium term, explaining that higher wage growth likely won't match higher productivity right away.

(Source: Oxford Economics)

Paypal, Eli Lilly, 3M: Stocks trending in afternoon trading

Tue, April 30, 2024 at 1:17 p.m. EDT, Alexandra Canal

Here are the stocks trending on Yahoo Finance in afternoon trading on Tuesday:

PayPal (PYPL): Shares popped as much as 4.1% after the company reported first quarter earnings that saw payment volume surge 14% compared to the prior-year period. Revenue beat analyst expectations in the quarter while adjusted earnings per share came up short.

Eli Lilly and Company (LLY): Shares of the pharmaceutical giant rose roughly 6% after the company raised its annual sales forecast by $2 billion, citing heightened demand for its GLP-1 weight-loss drugs Mounjaro and Zepbound.

3M Company (MMM): Shares jumped about 3% after the company reported a 21% year-over-year increase in quarterly profits as price hikes and cost cuts offset slowing sales. The company also said it would cut its dividend following the April 1 spinoff of its healthcare segment, Solventum Corp.

McDonald's (MCD): Shares of the fast food giant traded flat after the company posted a miss on both the top and bottom lines as same-store sales also came short of expectations. CEO Chris Kempczinski also noted a more cautious consumer, saying on the earnings call: "Consumers continue to be even more discriminating with every dollar that they spend."

Warner Bros. Discovery tanks as NBC looks to clinch NBA media rights

Tue, April 30, 2024 at 12:22 p.m. EDT, Alexandra Canal

Shares of Warner Bros. Discovery (WBD) fell about 9% in afternoon trading on Tuesday — on track for their lowest close since March 2009.

The move to the downside comes as new reports swirl regarding the NBA's rights renewal negotiations. Warner Bros. Discovery's TNT network, along with Disney's ESPN (DIS), hold the current media rights for the league, although they expire at the end of the 2024-2025 season.

Warner Bros. Discovery was unable to strike a new agreement before the exclusive negotiation period expired last week. Disney has reportedly agreed to increase its payment of $1.5 billion a year to $2.6 billion in order to renew the deal.

According to the Wall Street Journal, Comcast's NBCUniversal (CMCSA) is nearing a deal to pay $2.5 billion a year to air a package of NBA games. That's more than double the $1.2 billion annual fee Warner Bros. Discovery currently shells out.

The package would reportedly include playoff and regular season games that would air on the NBC network, along with the company's flagship streaming service Peacock.

Amazon (AMZN) is also in talks for a streaming rights package through its Prime Video service.

Amazon earnings in focus

Tue, April 30, 2024 at 11:22 a.m. EDT, Alexandra Canal

All eyes will be on Amazon earnings with the tech giant set to report quarterly results after the closing bell today. Yahoo Finance's Hamza Shaban tells us what to expect amid the wave of Big Tech results:

Amazon is expected to offer updates on the progress of its AI development, the state of its lucrative cloud business, and the growth of its advertising segment.

The report will arrive a week after the company's cloud rival and AI competitor Microsoft (MSFT) posted an impressive quarter, beating expectations on the strength of its cloud computing business. The market cheered even louder for Google parent Alphabet's (GOOG, GOOGL) results, which outperformed on the top and bottom lines and came with an announcement of a new dividend, the latest in a trend among tech giants.

Here’s what Wall Street is expecting for some of Amazon's most significant metrics in the company’s fiscal fourth quarter:

• Revenue: $142.6 billion expected ($127.4 billion in Q1 2023)

• Adjusted earnings per share: $0.82 expected ($0.31 in Q1 2023)

• Online Stores: $54.8 billion expected ($51.1 billion in Q1 2023)

• Amazon Web Services: $24.1 billion expected ($21.4 billion in Q1 2023)

• Advertising: $11.8 billion expected ($9.5 billion in Q1 2023)

Read more here.

Consumer confidence hits lowest level since July 2022

Tue, April 30, 2024 at 10:24 a.m. EDT, Josh Schafer

Consumer confidence declined to its lowest level in more than a year and a half during April.

The latest survey from the Conference Board showed consumer confidence retreated to a reading of 97 in April, below economists' expectations for a reading of 104 and lower than March's reading of 103.1.

"Consumers became less positive about the current labor market situation, and more concerned about future business conditions, job availability, and income,” The Conference Board chief economist Dana Peterson said in the release.

Peterson added: "According to April’s write-in responses, elevated price levels, especially for food and gas, dominated [consumers'] concerns, with politics and global conflicts as distant runners-up."

Consumers' expectations for the next six months slipped as well, also hitting their lowest level since July 2022. The Conference Board reasoned this was driven by a more pessimistic outlook for "future business conditions, labor market conditions, and income expectations."

The decrease in consumer confidence comes as US economic data has been increasingly mixed. Several months of inflation data have shown price increases aren't slowing as fast as hoped. Meanwhile, economic growth in the first quarter came in slower than expected.

Wages increase by most in a year in first quarter, feed case for Fed to 'take its time'

Tue, April 30, 2024 at 10:08 a.m. EDT, Josh Schafer

A closely tracked wage growth metric hit its highest level in a year during the first quarter, fueling concerns that sticky inflation may be pervasive, forcing the Fed to hold interest rates steady for longer than initially hoped.

New data out Tuesday from the Bureau of Labor Statistics showed that compensation costs increased 1.2% in the first quarter, above the prior quarter's 1% increase and higher than the 0.9% economists had expected, per Bloomberg data.

Capital Economics chief North America economist Paul Ashworth said Tuesday's data shows that wage growth is "sticky too," not just inflation data.

"The persistence of wage growth is another reason for the Fed to take its time on rate cuts," Ashworth wrote in a note following the release.

Markets appeared to adjust to that reality as well. The 10-year Treasury yield (^TNX) added about six basis points to hit 4.67% immediately following the ECI release, while all futures tied to all three major averages turned lower.

"With [Federal Reserve chair Jerome] Powell indicating the Fed should allow restrictive policy further time to work and a clear majority of policymakers favoring two or fewer rate cuts in 2024, this report will push Fed officials to further assert their hawkish stance," EY chief economist Gregory Daco wrote in a note following the release.

Home prices rise at the fastest pace since November 2022

Tue, April 30, 2024 at 9:34 a.m. EDT, Dani Romero

Home prices in February rose at the fastest clip since November 2022, according to national home price data released Tuesday.

Prices nationwide rose 6.4% over the same month last year, the S&P CoreLogic Case-Shiller Home Price Index showed.

"Following last year's decline, U.S. home prices are at or near all-time highs," Brian Luke, head of commodities, real & digital assets at S&P Dow Jones Indices, wrote in a press release.

"Our 10- and 20-City Composite indices are currently at all-time highs."

A gauge measuring price changes in 20 of the nation’s largest cities increased 7.3%, up from a 6.6% increase in the previous month. Data from Bloomberg showed that analysts had expected this reading to show prices rose by 6.7% over the prior year.

Prices rose 0.6% nationally compared to the prior month, the first monthly increase since last October. On a seasonally adjusted basis, prices rose 0.4% in February.

"Since the previous peak in prices in 2022, this marks the second time home prices have pushed higher in the face of economic uncertainty," Luke added.

"The first decline followed the start of the Federal Reserve’s hiking cycle. The second decline followed the peak in average mortgage rates last October. Enthusiasm for potential Fed cuts and lower mortgage rates appears to have supported buyer behavior, driving the 10-and 20- City Composites to new highs."

On a monthly basis, Seattle, San Diego, and San Francisco saw the largest jumps in home prices. Over the prior year, San Diego, Detroit, and Chicago saw the biggest price increases.

"The substantial shortage of existing homes for sale fueled a robust 0.4% [month-over-month] rise in house prices in February, consistent with our above-consensus call that house price growth will end 2024 at 5% [year-over-year]," wrote Thomas Ryan, property economist at Capital Economics, in a note to clients on Tuesday.

"Looking ahead, while still high mortgage rates will prevent a house price boom, we think the combination of tight supply and rising buyer demand will deliver a few more years of solid house price growth."

US stocks open lower

Tue, April 30, 2024 at 9:33 a.m. EDT, Alexandra Canal

US stocks opened lower on Tuesday as investors eye the Federal Reserve's upcoming interest rate decision on Wednesday, with Amazon (AMZN) earnings on tap after the bell.

The S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) each slipped roughly 0.3% and 0.4%, respectively. The Dow Jones Industrial Average (^DJI) also fell about 0.4%.

Stocks are on track to post their worst month of 2024, snapping a five-month win streak.

Here's another surprise from restaurant earnings

Tue, April 30, 2024 at 7:50 a.m. EDT, Brian Sozzi

You don't see this too often, but Restaurant Brands' (QSR) Burger King chain had a better quarter of sales than archrival McDonald's (MCD).

Burger King revealed this morning a 3.9% same-store sales increase in the first quarter, outpacing McDonald's 2.5% gain.

Restaurant Brands has been very aggressive in marketing for BK this year, especially with its new (and cheap) snack wraps. So maybe BK has won back market share among consumers searching for deals.

Full watch below on what Restaurant Brands is up to with executive chairman Patrick Doyle and CEO Josh Kobza.

Fast analysis: McDonald's joins the price hike commentary

Tue, April 30, 2024 at 7:44 a.m. EDT, Brian Sozzi

McDonald's (MCD) highlighted "strategic" menu price increases in the US for the first quarter.

It's unclear from the company's supplementary release if the price hikes impacted store traffic.

But the company's US comparable sales only rose 2.5%, so it's safe to infer the company did see some pushback on the prices from diners.

More on the quarter from Yahoo Finance Senior Reporter Brooke DiPalma here.

Fast analysis: Molson Coors also calls out price hikes

Tue, April 30, 2024 at 7:28 a.m. EDT, Brian Sozzi

Similar to Coca-Cola (KO) this morning, fellow beverage giant Molson Coors (TAP) had a strong quarter on the back of price hikes sticking around.

Molson Coors said pricing increased by 4.4% in the quarter, no small feat in the ultra-competitive beer industry.

Interestingly, the volume for Coors Light rose by a double-digit percentage.

You read that correctly... Coors Light.

Fast analysis: Coca-Cola earnings reveal one point on inflation

Tue, April 30, 2024 at 7:12 a.m. EDT, Brian Sozzi

We saw it with PepsiCo (PEP) earnings last week, and we see it again with Coca-Cola (KO) results this morning: Big food players are still pushing through price increases on consumers (memo to the Fed).

Coca-Cola noted that "price/mix" in the first quarter grew a hearty 13%.

Keep an eye on Yahoo Finance Senior Reporter Brooke DiPalma on our platform today — she will be speaking with Coca-Cola CEO James Quincey for added intel on the results.