Markets Rebound on Trade Hopes, Earnings Beats, and Mortgage Recovery

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Index Update

Investor sentiment improved as U.S. officials prepared to meet Chinese counterparts in Switzerland for trade talks, while markets awaited the Federal Reserve’s policy decision, with rates expected to remain unchanged. Traders are focused on Fed Chair Powell’s remarks for hints on future policy amid political pressure to cut rates. On the corporate front, AMD shares rose on strong earnings, while Rivian declined after cutting its 2025 delivery forecast. Major indexes closed lower in the previous session, with the Dow, S&P 500, and Nasdaq all posting losses.

Market Movers

On Tuesday, the top gainers were FARO Technologies, Inc (+34.47%), followed by ThredUp Inc (+20.72%). On the contrary Tactile Systems Technology, Inc (-33.86%) and Omnicell, Inc (-25.22%) declined the most the same day.

Commodities Update

WTI crude rose above $60 and Brent topped $63 per barrel on Wednesday, extending gains of over 3% amid signs of weakening US production and rising demand in Europe and China. Major US producers like Diamondback Energy and Coterra Energy are cutting rig counts, helping curb output. Meanwhile, China's consumer spending surged during the May Day holiday, and European companies are expected to post earnings growth in Q1. Hopes for improved US-China relations, boosted by reports of upcoming bilateral talks, further lifted sentiment. Additionally, a larger-than-expected 4.5 million-barrel draw in US crude stocks supported prices.

Gold prices slipped to around $3,380 per ounce, ending a two-day rally, as easing trade tensions between the US and China reduced demand for safe-haven assets. The planned meeting between US and Chinese officials signals progress in de-escalating the trade war, following recent tariff hikes by both sides. Investors are now focused on the Federal Reserve’s policy announcement, with expectations that rates will remain unchanged despite political pressure for cuts.

Macro Update

U.S. mortgage applications rose 11% in the week ending May 2, breaking a three-week decline, as falling benchmark rates encouraged renewed activity. Both home purchase and refinance applications increased by 11%, with refinance demand boosted by a 26% surge in Veterans Affairs loans.

Futures Update

U.S. stock index futures rose as optimism grew over the resumption of trade negotiations between the U.S. and China, boosting investor sentiment after a previous market decline. Hopes for easing global tensions helped lift the Dow Jones, S&P 500, and Nasdaq 100 futures by around 0.5% each, although gains were limited by caution ahead of the Federal Reserve’s policy decision.

Stocks experienced further weakness on Tuesday after a volatile and mostly lower finish to Monday. The major averages all moved lower, giving back more of last Friday's one-month gains. The S&P 500 fell 43.47 points (0.77%), closing at 5606.90. Technical indicators point towards a potential period of consolidation with a bearish bias. A rising wedge pattern is visible on the daily chart, and the price is near the 50-period exponential moving average, which could act as short-term resistance. Support is identified at 5,433 and resistance at 5,732.