The Day Ahead: China Talks, Fed Call, and Powell Set the Tone for Markets Today

Market Overview

U.S. equity futures are higher premarket Wednesday, buoyed by optimism around newly announced U.S.-China trade talks. Dow futures are up 196 points (+0.48%), while S&P 500 and Nasdaq 100 futures each gain approximately 0.5%. This follows Tuesday’s declines, where the Dow shed 390 points (-1%) and the S&P 500 and Nasdaq Composite fell 0.8% and 0.9%, respectively.

The driver for today’s trade is twofold: renewed geopolitical engagement and the highly anticipated FOMC rate decision. Treasury Secretary Scott Bessent and Trade Rep. Jamieson Greer will meet with Chinese officials in Switzerland this week — the first formal U.S.-China trade talks since President Trump’s new tariff regime. Markets view this as a potential de-escalation step.

Key Economic Releases

The Federal Open Market Committee (FOMC) concludes its two-day meeting today, with a rate decision due at 18:00 GMT. The Fed is widely expected to hold the target range at 4.25%-4.50%. At 18:30 GMT, Fed Chair Jerome Powell will address the media, with traders scrutinizing his tone amid pressure from President Trump and elevated macro uncertainty.

Fed funds futures now show only a 36.6% probability of a June rate cut, down from 55% post-April jobs data. Barclays’ Marc Giannoni expects no imminent move, citing stable labor conditions.

Earnings Recap – After Tuesday’s Close

Advanced Micro Devices (AMD) rallied nearly 4% after topping Q1 expectations with EPS of $0.96 on $7.44B revenue vs. $0.94/$7.13B est.

Electronic Arts (EA) jumped 5% on stronger-than-expected bookings of $1.80B vs. $1.56B est., along with upbeat FY26 guidance.

Super Micro Computer (SMCI) dropped ~5% after missing Q3 estimates and issuing a weak outlook: $0.31 EPS vs. $0.50 est., and $4.60B revenue vs. $5.42B.

Sarepta Therapeutics (SRPT) plunged 23% after cutting FY revenue guidance despite beating Q1 expectations.

Upstart (UPST) sank 17% on weak forward guidance, even as Q1 results topped consensus.

Notable Earnings – Wednesday, May 7

Walt Disney (DIS) reports before the open (~11:30 GMT). UBS expects “resilient results” with strength in Parks and sports advertising, though macro pressure has led to a price target cut to $105 from $130. EPS guidance is expected to remain intact.

Other names reporting premarket include Barrick Gold (GOLD), Emerson (EMR), Johnson Controls (JCI), and MarketAxess (MKTX). Key after-the-close reports (post-20:00 GMT) include Uber (UBER) and Carvana (CVNA).

Technical Outlook

The S&P 500 E-mini Futures (ES) are trading around 5,656.25 after reclaiming the 50-day SMA (5,603). Momentum is improving, but price remains below the 200-day SMA (5,872).

The May 2 high at 5724.75 is short-term resistance, with a breakout needed to test the 5837.25 swing high. Tuesday’s low at 5,608.50 now acts as initial support. A failure to hold the 50-day could see a drop toward the 5,500–5,525 zone.

Outlook

With geopolitical sentiment improving and the Fed expected to hold rates, market focus will be on Powell’s 18:30 GMT press conference for any clues on timing of future cuts. Expect rate-sensitive volatility post-FOMC, while earnings will continue driving individual names, particularly in tech and consumer sectors.

More Information in our Economic Calendar.