Stock Market Update

The S&P 500 futures are up 36 points and are trading 0.6% above fair value, the Nasdaq 100 futures are up 121 points and are trading 0.6% above fair value, and the Dow Jones Industrial Average futures are up 267 points and are trading 0.7% above fair value.

The major equity indices are poised for a higher open after two days of declines. Sentiment is boosted by news that China and the U.S. will meet in Switzerland to discuss trade over the weekend.

Treasury Secretary Bessent said in an interview that the meeting will be more about de-escalation than a big trade deal. Also, Morgan Stanley analysts noted a durable resolution remains "likely elusive."

Market participants expect the FOMC to hold the fed funds rate steady at 4.25-4.5% at today's 2:00 ET policy announcement. Participants will be listening for any perceived guidance on inflation and economic growth risks related to the tariffs as it impacts moving rates in the future. 

Treasury yields are slightly higher. The 10-yr yield is up two basis points to 4.33% and the 2-yr yield is up three basis points to 3.82%.

In corporate news:

• Walt Disney (DIS 98.00, +5.83, +6.3%): beats by $0.26, beats on revs; guides FY25 EPS above consensus
• Advanced Micro Devices (AMD 100.50, +1.88, +1.9%): beats by $0.02, beats on revs; guides Q2 revs in-line
• Super Micro Computer (SMCI 31.08, -1.86, -5.7%): misses by $0.10, misses on revs; guides Q4 EPS below consensus, revs below consensus; guides FY25 revs below consensus
• Uber (UBER 82.40, -3.42, -4.0%):  beats by $0.32, reports revs in-line; provides Q2 gross bookings and adjusted EBITDA guidance
• Arista Networks (ANET 86.10, -4.67, -5.1%): beats by $0.06, beats on revs; guides Q2 revs above consensus; notes additional program to repurchase up to $1.5 bln
• Rivian Automotive (RIVN 13.40, -0.10, -0.8%): beats by $0.29, beats on revs; sees 40,000 to 46,000 deliveries for FY25

Reviewing overnight developments:

• Equity indices in the Asia-Pacific region had a higher showing on Wednesday. Japan's Nikkei: -0.1%, Hong Kong's Hang Seng: +0.1%, China's Shanghai Composite: +0.8%, India's Sensex: +0.1%, South Korea's Kospi: +0.6%, Australia's ASX All Ordinaries: +0.4%.
  • In economic data:
    • China's April FX Reserves $3.282 trln (last $3.241 trln)
    • Japan's April Services PMI 52.4 (expected 52.2; last 50.0)
    • Hong Kong's April Manufacturing PMI 48.3 (last 48.3)
    • Australia's April AIG Manufacturing Index -26.5 (last -29.7) and AIG Construction Index -7.9 (last -19.3)
    • New Zealand's Q1 Employment Change 0.1% qtr/qtr, as expected (last -0.1%). Q1 Labor Cost Index 0.4% qtr/qtr (expected 0.5%; last 0.6%); 2.5% yr/yr (expected 2.7%; last 2.9%). Q1 Unemployment Rate 5.1% (expected 5.3%; last 5.1%) and Participation Rate 70.8% (expected 71.0%; last 70.9%)
  • In news:
    • Representatives from China and the U.S. will meet in Switzerland to discuss trade over the weekend.
    • China will implement stimulus measures, including a 50-basis point cut to the reserve requirement ratio (to 9.00%), and a ten-basis point cut to the seven-day reverse repurchase rate (to 1.40%).
    • The standing lending facility rate will be lowered to 2.25%.
    • India and Pakistan exchanged live fire along the Kashmir line, serving as a reminder of the elevated tension between the two nations.
• Major European indices trade on a lower note. STOXX Europe 600: -0.3%, Germany's DAX: -0.1%, U.K.'s FTSE 100: -0.4%, France's CAC 40: -0.6%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.4%.
  • In economic data:
    • Eurozone's March Retail Sales -0.1% m/m, as expected (last 0.2%); 1.5% yr/yr (expected 1.6%; last 1.9%)
    • Germany's March Factory Orders 3.6% m/m (expected 1.4%; last 0.0%)
    • France's March Current Account surplus EUR1.40 bln (last deficit of EUR1.60 bln). March trade deficit EUR6.2 bln (expected deficit of EUR7.0 bln; last deficit of EUR7.7 bln). Q1 nonfarm payrolls 0.0% qtr/qtr, as expected (last -0.3%)
    • Italy's March Retail Sales -0.5% m/m (expected 0.2%; last 0.1%); -2.8% yr/yr (last -1.4%)
  • In news:
    • Initial optimism following news that U.S. and Chinese officials are set to meet this weekend to discuss trade was tempered by ongoing concerns about the impact of tariffs, with Morgan Stanley analysts noting a durable resolution remains "likely elusive."
    • German factory orders for March surprisingly surged as firms stockpiled ahead of tariffs, but Eurozone retail sales dipped slightly.
    • On the earnings front, food retailer Ahold Delhaize reported strong sales, while pharmaceutical company Novo Nordisk cut its guidance due to competition.