Equity futures up, but lacking the thrust one might have expected

This is one of those days where there is a little something for everyone, but not all of those things are little in terms of their interest.

• Treasury Secretary Bessent and U.S. Trade Representative Greer will meet China’s Vice Premier He Lifeng in Switzerland on May 8.
• India launched attacks on nine sites in Pakistan yesterday, according to Reuters.
• The People’s Bank of China lowered its 7-day reverse repurchase rate by 10 basis points to 1.40% and the required reserve ratio by 50 basis points to 9.00%.
• Walt Disney (DIS) reported better-than-expected Q1 results and issued better-than-expected FY25 guidance.
• The two-day FOMC meeting concludes today with a policy decision at 2:00 p.m. ET, followed by Fed Chair Powell’s press conference at 2:30 p.m. ET.

Currently, the S&P 500 futures are up 16 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 40 points and are trading 0.2% above fair value, and the Dow Jones Industrial Average futures are up 167 points and are trading 0.4% above fair value.

The impending meeting between U.S. and Chinese officials in Switzerland has garnered the most attribution as the driver behind the gains in the equity futures market. The reaction, though, appears to be more subdued than one might expect given the positive-sounding implications of that meeting.

There are two reasons for that. The first is that the meeting, according to Treasury Secretary Bessent, will be more about de-escalation than a big trade deal. That is a step in the right direction, but not the giant leap of ending the trade war that everyone wants to see. 

Notably, Asian markets were mixed with modest moves, and major European bourses are lower in today’s action. There also hasn’t been a material flight from safety. The 2-yr note yield is up two basis points to 3.81%, and the 10-yr note yield is up one basis point to 4.32%.

The second explanation is that there is a sense of reserve ahead of the FOMC announcement today. That sense of reserve has little to do with the policy decision itself. Market participants widely expect the target range for the fed funds rate to remain unchanged at 4.25-4.50%. The reserve relates to what Fed Chair Powell will say at his press conference and how he frames the Fed’s thinking on growth and inflation dynamics and what they mean for the policy path.

A residual explanation for why there isn’t as much thrust in the equity futures market is that the earnings results and guidance since yesterday’s close haven’t been universally comforting. 

Marvell (MRVL), for instance, narrowed its Q1 revenue guidance and postponed its Investor Day due to the dynamic macroeconomic environment; Uber’s (UBER) Q1 earnings were good but its revenue was a bit light of expectations; Rivian’s (RIVN) full-year deliveries guidance fell short of expectations; and Allegiant Travel (ALGT) and Steven Madden (SHOO) were added to the list of companies that withdrew their full-year guidance, citing the macroeconomic uncertainty.

The stock market has seen two consecutive losing sessions this week after logging gains for nine straight sessions. Today will start with a bid to reclaim some of those losses, yet participants are going to be more interest in how the market closes today than how it opens.

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Originally Posted on May 7, 2025 – Equity futures up, but lacking the thrust one might have expected