Stocks took a hit on Tuesday as fresh data sparked worries about persistent inflation. The Dow Jones Industrial Average dropped 571 points, marking a 1.5% decline. The S&P 500 and the Nasdaq Composite also saw losses of 1.6% and 2%, respectively. This downturn ended a five-month streak of gains for all three major indexes, with the Dow recording its worst month since September 2022.
The latest Employment Cost Index (ECI) figures revealed a 1.2% increase last quarter, up from the previous quarter's 0.9% rise. This accelerated compensation growth has investors concerned about its potential to fuel inflation further. The ECI data adds to a series of reports showing higher-than-expected inflation rates and a slowdown in the US gross domestic product.
Market traders are now grappling with the dual challenge of slowing economic growth and persistent inflation, which could complicate the Federal Reserve's decision-making on interest rates. The Fed commenced its two-day monetary policy meeting on Tuesday, with an announcement expected on Wednesday that rates will remain unchanged. Investors are eagerly awaiting insights from Chair Jerome Powell on the Fed's timeline for potential rate adjustments, which currently remains uncertain.
As the trading day concludes, stock levels may experience slight fluctuations as investors digest the latest economic indicators and await further guidance from the Federal Reserve.
