U.S. equity futures moved higher in early Wednesday trading, while the dollar snapped it recent run of declines and Treasury yield steadied, as investors looked to a key Federal Reserve policy meeting buoyed by nascent trade talks between Washington and Beijing.
Stocks ended firmly lower on Tuesday, with the S&P 500 falling 0.77% to slip back into negative territory for the second quarter, amid renewed inflation concerns and the broader economic damage from President Donald Trump’s tariff strategy.Â
That’s put this weekend’s planned detente between Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer in sharp focus, as investors hope the first meeting will lead to a thaw in relations between the world’s two biggest economies, each of which have applied crippling tariffs on the other in the simmering global trade war.
“My sense is that this will be about de-escalation, not about the big trade deal, but we’ve got to de-escalate before we can move forward,” Bessent said during a Tuesday interview with Fox News’s “The Ingraham Angle.”
The boost to sentiment could be short-lived, however, as investors navigate today’s Fed meeting in Washington, where Chairman Jerome Powell and his colleagues are likely to hold the central bank’s key interest rate unchanged and 4.375% and strike a hawkish tone on near-term reductions amid resurgent inflation pressures.Â
The CME Group’s FedWatch indicates only a 3% change of a rate cut at today’s meeting, and pegs the odds of a June reduction at not more than 31%.Â
“However, any sign of potential cuts in the future might see the US dollar fall further, with recent Fed commentary divided between concerns over the inflationary impact of tariffs and worries about a slowdown in the labour market,” said Steven Dooley, head of market insights at London-based Convera.Â
Related: Ford, Mattel join growing list of U.S. companies facing profit hit from tariffs
The U.S. dollar index was last marked 0.3% higher against a basket of six global currencies at 99.546, but has fallen more than 4.5% since the start of the second quarter.Â
In the bond market, benchmark 10-year Treasury note yields were holding steady at 4.316% following a solid auction of $42 billion in new paper yesterday, while 2-year notes were pegged at 3.814%.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is now up just 0.68% for the month, are priced for an opening bell gain of around 28 points.
The Dow Jones Industrial Average is called 210 points higher while the tech-focused Nasdaq is expected to gain around 115 points.
Stocks on the move include Advanced Micro Devices (AMD) , which edged 1.6% higher in premarket following a better-than-expected first quarter earnings report and near-term outlook despite added costs linked to U.S. tariffs and China export restrictions.Â
Super Micro Computer (SMCI) , however, slumped 4.5% after it posted March-quarter revenues that missed Wall Street forecasts and warned that tariff uncertainty would act as a headwind to profits over the coming months.Â
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In overseas markets, Europe’s Stoxx 600 was marked 0.34% lower in Frankfurt, with the FTSE 100 down 0.32% in London.
Overnight in Asia, a surprise rate cut from the People’s Bank of China, which lowered its benchmark seven-day repo rate by 10 basis points to 1.4%, boosted China stocks and nudged the MSCI ex-Japan index into positive territory for the session.Â
Japan’s Nikkei 225, meanwhile, returned from its traditional May holiday break to slip 0.14% by the close of trading in Tokyo.
