U.S. stocks performed mixed on Wednesday as investors weighed hopes for renewed U.S.-China trade talks and braced for the Federal Reserve’s upcoming interest rate decision.
The Dow Jones Industrial Average (DJI) led the major indexes, gaining 0.62% midday, lifted by a surge in Disney shares. The S&P 500 (GSPC) saw a slight increase of 0.16%, while the Nasdaq Composite (IXIC) dropped 0.4%, pressured by a sharp decline in Alphabet stock. A backdrop of geopolitical uncertainty and central bank caution left traders walking a tightrope.
Investors welcomed headlines that Treasury Secretary Scott Bessent and other US officials will meet with Chinese delegates this weekend in Geneva—the first high-level talks since April’s tariff escalation. Still, expectations remain tempered, with both sides signaling that no breakthrough is imminent. Meanwhile, the Fed’s rate decision is expected at 2 p.m. ET, with markets betting on a pause—but closely watching for any shift in tone from Chair Jerome Powell.
Market Movers
- Disney (DIS) +10.49%: Shares surged after the entertainment giant posted a strong quarterly earnings report and lifted its profit outlook. The results were powered by a rebound in its US theme parks and improved performance in its streaming division. Investors were also energized by news that Disney will open a new theme park in Abu Dhabi — its first in the Middle East — as part of a $60 billion global expansion.
- Alphabet (GOOGL) -5.0%: The stock fell sharply after Bloomberg reported that Apple is actively exploring adding AI-powered search to its Safari browser. Apple executive Eddy Cue’s comments, made during testimony in the DOJ’s antitrust suit against Google, stoked fears that a shift in Apple’s default search provider could erode Alphabet’s dominance in the space.
- Marvell Technology (MRVL) -11.3%: The stock plunged after the AI chipmaker postponed its investor day and narrowed its Q1 revenue guidance, citing macroeconomic uncertainty. The company now expects $1.875 billion in revenue, tightening its forecast range and sparking concerns about demand. The broader chip sector has been under pressure from new and potential future export bans targeting China.
- Novo Nordisk (NVO) +1.92%: Despite lowering its 2025 sales and profit guidance, Novo Nordisk rose nearly 2% as investors bet that legal developments could shield its best-selling weight-loss drug Wegovy from generic competition. A potential copycat ban appears to be driving optimism even as the company revised its outlook downward.
Fed Holds Center Stage
Investors are largely betting the Fed will hold interest rates steady, with CME FedWatch data showing a 96% probability of no change. However, the real action comes during Fed Chair Jerome Powell’s press conference. Traders will be listening for clues on how the central bank views the impact of Trump’s tariff hikes, which raised duties on Chinese imports to 145% in April, and what that might mean for the inflation outlook and the timing of any rate cuts.
While rate policy remains data-dependent, Powell's tone could shape expectations for the next six months. Hawkish remarks might push back hopes for a September cut, while dovish language could reignite risk appetite and rally stocks into the summer.
US-China Trade Talks
Markets initially rose after news broke that Treasury Secretary Scott Bessent and other top US officials would meet Chinese Vice Premier He Lifeng in Switzerland this weekend. This is the first face-to-face since Trump escalated tariffs, and the market sees it as a sign of possible de-escalation.
However, Bessent downplayed the idea of an imminent breakthrough, stressing that these are "not advanced" negotiations. Both the US and China signaled that the upcoming meeting would likely focus on easing tensions rather than hammering out a sweeping trade deal. Still, any move to reduce tariffs — or just pause further escalation — could support equities and reduce uncertainty for multinational firms.
Looking Ahead
With major earnings out and geopolitical tensions in the spotlight, markets are entering a pivotal stretch. Investors will closely parse Powell’s remarks this afternoon for guidance on the Fed’s trajectory. At the same time, hopes for US-China détente are tempered, but real — and even a symbolic gesture could buoy sentiment.
Eyes now turn to Geneva this weekend and to inflation data next week. For now, the Dow is riding Disney’s magic, but markets are bracing for more volatility as trade, tech, and monetary policy continue to collide.