S&P 500 futures experienced a notable increase on Wednesday night, following a successful trading day that marked a second consecutive gain for major stock indexes. Futures tied to the broad market index climbed by 0.3%, while Nasdaq 100 futures also rose by 0.3%. In contrast, the Dow Jones Industrial Average futures dipped slightly, losing 15 points.
In the extended trading session, International Business Machines (IBM) saw a significant decline of over 6%. Despite posting earnings and revenue that exceeded analysts' expectations for the first quarter, IBM chose to maintain its full-year guidance, which raised concerns among investors. Additionally, Southwest Airlines experienced a drop of over 2% after announcing plans to reduce its schedule in the latter half of the year and retracting its earnings guidance for both 2025 and 2026.
During regular trading hours, the S&P 500 surged by nearly 1.7%, while the Nasdaq Composite jumped by 2.5%. The Dow also saw impressive gains, adding more than 400 points to its tally. However, while all three indices enjoyed a second day of gains, they closed well below their highs. At one point on Wednesday, the Dow was up by more than 1,100 points, showcasing the volatility in the market.
The recent uptick in stocks can be attributed to renewed optimism regarding trade relations between the U.S. and China. Earlier this week, former President Donald Trump indicated a willingness to adopt a less confrontational stance in trade discussions with Beijing. Moreover, Treasury Secretary Scott Bessent mentioned the potential for a significant trade deal, further bolstering market sentiment. Currently, Chinese imports are subject to a hefty U.S. tariff of 145%.
Despite the more dovish tone from the administration regarding tariffs, stocks continue to remain range-bound. Gaurav Mallik, chief investment officer at Pallas Capital Advisors, stated that while the comments are encouraging, the ultimate market goal is either a reversal of the tariffs or the establishment of substantial trade agreements. He emphasized that it could take several months for the current market corrections to conclude, reiterating that the rapid pace of declines suggests a correction phase is still in play.
In a related development, Trump announced on Tuesday that he has no intention of dismissing Federal Reserve Chairman Jerome Powell, whose term is set to end in May 2026. This declaration appeared to positively influence market sentiment, particularly given the increasingly strained relationship between Trump and Powell. Earlier in the week, Trump referred to Powell as a "major loser," highlighting the tension within this crucial economic relationship.
Looking ahead, all three major stock averages are on track for weekly gains, with the Nasdaq climbing 2.6% and the S&P 500 nearing a 1.8% increase. Meanwhile, the Dow is projected to achieve a 1.2% advancement during the same period. Investors are eagerly anticipating quarterly earnings reports from major companies, including Alphabet, Intel, and PepsiCo, scheduled for release on Thursday. Additionally, key economic data, such as durable goods orders and weekly jobless claims, will be released in the morning, further influencing market dynamics.
