PARIS (Reuters) – The New York Stock Exchange opened lower on Tuesday after the publication of data showing a rise in labor costs in the United States as the American Federal Reserve (Fed) begins a two-day meeting monetary policy.

Numerous company results, particularly in health and consumption, are also driving discussions while bond yields are trending upwards.

In early trading, the Dow Jones index lost 183.52 points, or 0.48%, to 38,202.57 points and the broader Standard & Poor’s 500 fell 0.27% to 5,102.23 points.

The Nasdaq Composite lost 0.37%, or 58.89 points, to 15,924.19.

The cost of labor in the United States increased more than expected in the first quarter, with an ECI index increasing by 1.2% after +0.9% in the fourth quarter of 2023. This increase comes in a context of increasing wages , confirming the surge in inflation at the start of the year while the Fed must make its monetary policy decisions on Wednesday.

On the bond market, the yield on ten-year US Treasury bonds stands at 4.6736%, up more than six basis points.

Money markets are now only pricing in a roughly 30 basis point cut in Fed rates in 2024 compared to reductions of 150 points at the start of the year, according to LSEG data.

“This suggests that the Fed will be very reluctant to cut short-term interest rates in 2024 and that has a predictable impact on the stock market,” says Hugh Johnson, chief economist at Hugh Johnson Economics.

“This does not definitively end interest rate cuts, but this number is certainly not going to help,” he adds.

On the results side, in health, Eli Lilly jumped 6.19% thanks to the increase in its annual turnover forecast against a backdrop of strong demand for its treatments against obesity. GE Healthcare Technologies, on the other hand, plunged 8.92% after missing expectations with first quarter revenue on Tuesday.

In consumption, Coca-Cola gained 0.96% after raising its organic sales forecast for this year, while Restaurant Brands International (+1.47%), the parent company of Burger King, benefited from quarterly results better than foreseen.

McDonald’s, on the other hand, fell by 1.66%, its turnover and profit having come out below expectations in the first quarter.

In other sectors, industrial giant 3M gained 3.80% thanks to better-than-expected quarterly profit, while Paypal Holdings advanced 2.58%, its annual profit forecast being welcomed.

(Writing by Claude Chendjou, edited by Kate Entringer)

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