Stocks opened in negative territory Tuesday, with losses accelerating into the close. Investors were already skittish ahead of tomorrow's Fed decision and this morning's disappointing inflation data did little to calm nerves.  

Ahead of the opening bell, the Bureau of Labor Statistics said the Employment Cost Index (ECI), which measures the cost of labor to businesses and governments, was up 1.2% quarter-to-quarter in Q1 – higher than the 0.9% increase in Q4 and the 1% gain economists were expecting. Year-over-year, the ECI rose 4.2%.

The data hit just as the Federal Reserve kicked off its latest meeting. A steady stream of economic data this year has shown that inflation remains sticky, pushing back the Fed's timeline for cutting interest rates. 

The central bank is widely expected to keep the federal funds rate at its current 23-year high when it concludes its meeting tomorrow, but investors are hopeful for any clues on when the first rate cut could hit. 

"The Fed is expected to say that recent signs of persistent inflation mean the central bank needs to keep interest rates high for longer," says Bill Adams, chief economist for Comerica Bank. "Barring a major crisis, a rate cut looks off the table before September, and even that is less likely than it seemed a few weeks ago given recent data demonstrating a broad-based increase in prices of services, houses, and labor costs in early 2024."

According to CME Group's ( CME ) FedWatch Tool, futures traders are currently pricing in the greatest odds (42%) for a rate cut at the Fed's November meeting, with a 41% chance it won't happen until December.

3M ( MMM ) rises despite dividend cut

It wasn't all about the Fed today, though. Investors sifted through a jam-packed earnings calendar, paying particular attention to several blue chip companies that reported. 

3M ( MMM ) , for one, was the best Dow Jones stock Tuesday, adding 4.7% after the Post-It maker disclosed higher-than-expected first-quarter earnings and raised its full-year guidance. This offset news that 3M ( MMM ) will cut its dividend following the spinoff of its healthcare business and as the company faces litigation costs related to "forever chemical" lawsuits. 

MMM is now at risk of being booted from the Dividend Aristocrats, the best dividend stocks in the S&P 500 that have raised their annual payouts for at least 25 straight years. 3M's ( MMM ) streak of dividend hikes will end at 64 years.

Fellow Dow stock Coca-Cola (KO) also beat analysts' estimates for its first-quarter results, but shares fell 0.5%. And McDonald's (MCD) slipped 0.2% after posting its first earnings miss in years.  

Eli Lilly ( LLY ) sizzles as demand for weight-loss drugs spikes

Outside of the 30-stock index, Eli Lilly ( LLY ) stock jumped 6.0% after the pharmaceutical giant reported earnings. For Q1, LLY disclosed higher-than-expected earnings and lifted its full-year forecast thanks to sizzling demand for its weight-loss drugs, Mounjaro and Zepbound. 

Mounjaro, which is also used to treat type 2 diabetes, saw revenue spike to $1.8 billion from $568.5 million in Q1 2023. Revenue for Zepbound, which was just approved by the Food and Drug Administration (FDA) in November, came in at $517.4 million. 

As for the indexes, the Dow Jones Industrial Average fell 1.5% to 37,815, the S&P 500 shed 1.6% to 5,035, and the Nasdaq Composite ended the day down 2.0% to 15,657. All three indexes finished the historically strong month of April with significant losses.