Stock market today: an ugly month of April for Wall Street ends with more losses

NEW YORK (AP) U.S. stocks are lower Tuesday after the latest warmer-than-expected economic data raised fresh concerns about inflation and interest rates remaining high.

The S&P 500 was down 0.9% in afternoon trading and is on pace to close out its first losing month in the last six months. It has lost momentum since setting records earlier in the year, and April is on track to be its worst month since September.

The Dow Jones Industrial Average was down 409 points, or 1.1%, as of 12:34 p.m. Eastern Time, and the Nasdaq Composite Index was down 1.1%.

Stocks have struggled as traders have largely given up hope that the Federal Reserve will make multiple interest rate cuts this year. A series of reports showing inflation remains stubbornly high has pushed Treasury yields higher in the bond market, adding pressure to stocks.

Treasury yields rose again Tuesday after a report showed U.S. workers got bigger-than-expected gains in wages and benefits in the first three months of the year. While this is good news for workers and the latest signal that the labor market remains strong despite high interest rates, it fuels concerns that upward pressure on the labor market will continue. economy and inflation.

The yield on the 10-year Treasury rose to 4.66% from 4.61% just before the report was released. The two-year Treasury yield, which more closely tracks Fed expectations, rose above the 5% level to 5.01% from 4.97% Monday evening.

No one expects the Federal Reserve to change its main interest rate on Wednesday, following its last meeting. But traders are now mostly betting that the Fed will cut rates one or zero times over the rest of this year, according to CME Group data. This is a big disappointment after traders started the year predicting six or more cuts.

The Fed itself previously considered three rate cuts in 2024, but senior officials recently suggested rates could stay high for longer while awaiting confirmation that inflation was heading toward their 2% target. The Fed's main interest rate is at its highest level since 2001, putting downward pressure on the economy and investment prices.

Without the benefit of lower interest rates, companies will have to make higher profits to support their stock prices, which critics have called too expensive after their run to record highs.

GE Healthcare Technologies fell 13.2% after reporting earnings and revenue for the latest quarter that were weaker than analysts expected. F5 fell 7.8% despite a better-than-expected profit. Its revenue fell short of forecasts and the company said its customers remained cautious and forecast largely flat IT budgets for the year.

McDonalds erased much of its initial loss and fell 0.2% after its latest quarter profit fell slightly short of analysts' expectations. The company has been hurt by weakening sales at its overseas franchise stores, in part due to boycotts in predominantly Muslim markets due to the company's perceived support of Israel.

3M helped stem market losses, rising 3.9% after reporting better-than-expected earnings and revenue. Eli Lilly climbed 5% after reporting a higher-than-expected profit on strong sales of its diabetes and obesity drugs Mounjaro and Zepbound. It also raised its revenue and profit forecasts for the full year.

This earnings season has been significantly better than expected so far. Not only have the tech companies that dominate Wall Street done well, but smaller companies in various industries have also performed well.

That's a change from the recent past, and it prompted Deutsche Bank strategists to raise their full-year profit growth forecasts for the S&P 500. Many companies are beating forecasts because They were able to squeeze more out of every dollar of sales. than analysts expected, according to Binky Chadha, chief strategist at Deutsche Bank.

Such strength could support stock prices even if interest rates end up remaining high, according to Kristy Akullian, iShares head of investment strategy for the Americas.

Stocks don't need rate cuts from the Fed for the recovery to continue, all they need is solid earnings growth, she said.

In overseas stock markets, Japan's Nikkei 225 rose 1.2% after reopening after a public holiday. The government announced stronger than expected industrial production gains for the month of March.

Indices were mixed across much of the rest of Asia, but weaker in Europe.

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AP Business writers Yuri Kageyama and Matt Ott contributed.