Boy have I been there!! And now my daughter is almost 7 and in school and it doesn't get any easier I hate to say. But if you can nip this in the butt now, it will be a smoother ride when he starts school. I agree with the other ladies, you might want to find another daycare or find someone that baby sits out of their home. Have you talked with the head person at the daycare yet about your concerns? What I did with mine was taught her that the same behavior I expect at home, I expect at daycare, the babysitter, a family members home, etc when I'm not there. Words like shut up and stupid are 'dirty' words in my house. I gave her alternative ways to say shut up like please be quiet, I'm reading or what not. And as she got older, she knew that if she even got a warning for bad behavior that I was going to be very unhappy and that was worse than time out for her. Now I'm dealing with what she picks up at school and trying to get her to understand that not all parents have the same rules for their kids and I still expect her to act properly no matter what. But you are on the right track to get this taken care of before it gets way out of hand and starts happening at home.
Good luck to you and I hope you find a solution soon!
S.
Funny story for you......
My daughter is almost 7 and came home the other day and told me the neighbor boy said the "S" word. I had to giggle a bit casue I was thinking sh** but no, he called his brother stupid! So still till this day she knows that isn't a good word.