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S&P 500 Concludes Winning Streak Amid Worries About Inflation After 5 Consecutive Months Of Expansion

The S&P 500 index concluded down on Tuesday, putting an end to a streak of five months of growth as investors grappled with concerns regarding inflation driven by increasing wages. Here’s a summary of the market movements and significant events of the day:

Market Performance: Upon the close of trading, the Dow Jones Industrial Average plummeted by 570 points, representing a decline of 1.1%, while the S&P 500 dropped by 1.5% and the NASDAQ Composite slid down by 2%. The S&P 500 recorded a 3% decline for the month, underscoring the scope of the recent downturn.

Concerns About Inflation: Data indicating a rise in labor expenses in the U.S. during the initial quarter, primarily due to increasing wages and benefits, heightened apprehensions about inflation. The Employment Cost Index escalated by 1.2% in the last quarter, contributing to a 4.2% year-over-year surge in labor costs. These statistics added to recent reports that suggested mounting price pressures in the economy.

Meeting of the Federal Reserve: The Federal Reserve commenced its two-day meeting focused on policy-setting, with the prevailing anticipation that it would uphold its benchmark interest rate within the existing range of 5.25%-5.50%. The commentary by Fed Chair Jerome Powell following the meeting is eagerly awaited for insights into the central bank’s stance on inflation and the outlook on rates.

Highlights on Earnings: Numerous companies disclosed earnings, with noteworthy performances from Eli Lilly, 3M, Coca-Cola, and McDonald’s. The stocks of Eli Lilly and 3M surged after surpassing the expectations of analysts for the initial quarter, while the shares of Coca-Cola experienced a decline despite reporting robust quarterly earnings and revising its outlook for the full year. The stock of McDonald’s dipped after weaker-than-anticipated Q1 earnings, partially attributed to lower-than-projected same-store sales following calls for boycott related to the conflict in the Middle East.

Corporate Developments: Paramount Global witnessed a drop in its stock price subsequent to the resignation of CEO Bob Bakish amid ongoing deliberations concerning a potential collaboration with Skydance Media. In contrast, HSBC shares climbed following a Q1 profit announcement that surpassed expectations and the announcement of Chief Executive Noel Quinn’s retirement. The shares of PayPal also advanced subsequent to the company’s release of first-quarter results that exceeded expectations.

Bitcoin Fluctuations: Bitcoin prices descended below $60,000, marking a monthly decline of over 14% and indicating the most substantial monthly drop since November 2022. The cryptocurrency encountered pressure from a stream of fund withdrawals, contributing to the persistent fluctuations in the digital asset market.

As the market maneuvers through concerns about inflation, earnings disclosures, and corporate advancements, investors remain watchful for signals from the Federal Reserve and economic data that could influence future market trends.

Image Source: Janet Julie Vanatko / Shutterstock

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