02:07 PM EDT, 04/30/2024 (MT Newswires) -- US equity indexes fell Tuesday and the two-year government bond yield rose above the 5% mark as the Federal Reserve's preferred measure of wage growth surged more than forecast. The central bank also began its meeting to decide policy and the path ahead for interest rates.

The S&P 500 fell 0.9% to 5,070.2, with the Nasdaq Composite down 1.1% to 15,804.5 and the Dow Jones Industrial Average 1% lower at 38,016.1. Energy, consumer discretionary, and materials were the steepest decliners intraday. Healthcare and utilities were only gainers.

The Employment Cost Index, a leading indicator of wage growth closely watched by Fed policymakers, rose 1.2% quarter over quarter in March, up from 0.9% in the previous print and ahead of the 1% consensus forecast.

This kind of growth in employment costs requires strong productivity growth to pay for it without sparking inflation risk, according to a note from Scotiabank. Q1 productivity growth arrives on Thursday and will likely "slow to a crawl." Unit labor costs, a measure of productivity-adjusted labor costs, will probably come on "strong" on Thursday.

"The US also released mixed data, including a much stronger gain in a pair of repeat sales house price figures for February and a sharp drop in consumer confidence, but markets largely looked through those releases and stuck with the [Employment Cost Index] reaction," Derek Holt, the head of capital markets economics, said in the note.

The Conference Board's measure of consumer confidence fell to 97 in April from a downwardly revised index of 103.1 in March, below 104 expected in a survey compiled by Bloomberg.

The Case-Shiller National Home Price Index rose by 0.6% in February before seasonal adjustment following a 0.1% decrease in January. National home prices were up 6.4% year over year, from a 6% gain in January and the fastest gain since November 2022.

The Federal Reserve began its two-day policy meeting on Tuesday, with interest rates widely expected to remain unchanged. In fact, according to the CME Group's FedWatch Tool, the probability of the Fed remaining on hold in September jumped to 51% as of Tuesday afternoon from 43% a day ago.

The US 10-year Treasury yield jumped 5.1 basis points to 4.66%, and the two-year rate advanced 4.5 basis points to 5.02%.

In company news, F5 (FFIV) sank 8% intraday, among the worst performers in the S&P 500 and the Nasdaq, after fiscal Q2 revenue declined more than forecast. The company also issued fiscal Q3 guidance that fell short of the average analyst estimates compiled by Capital IQ.

Meanwhile, Trane Technologies' ( TT ) Q1 adjusted continuing earnings and net revenue increased more than forecast. Shares jumped nearly 7% intraday, the highest return on the S&P 500.

West Texas Intermediate crude oil slumped 1.1% to $81.74 a barrel.