Dow futures edged higher on Wednesday as investors look optimistic over a potential Federal Reserve rate cut and strong performance in chip stocks.
The futures tied to Dow Jones Industrial Average gained 0.4%, while S&P 500 and Nasdaq 100 futures advanced 0.6% and 0.8%.
The stabilisation on Wall Street comes after a shaky session on Tuesday, as investors grew cautious about the potential US-China trade war.
Despite geopolitical concerns, risk appetite improved as Fed Chair Powell’s comments on labor market weakness bolstered expectations for monetary easing.
5 things to know before Wall Street opens
1. As of Wednesday, the US federal government shutdown has dragged into its 15th day, and there’s still no end in sight.
The Senate has now failed eight times to push through a funding bill.
More than 750,000 federal workers are on furlough and just missed their first regular paycheck, while essential staff, including military personnel, are still on the job, working without pay.
President Donald Trump has stepped in to make sure military salaries are covered despite the shutdown, and he’s also threatened cuts to programs supported by Democrats.
Meanwhile, the White House is planning additional layoffs if the deadlock continues.
2. Major corporations are set to report their Q3 2025 earnings on Wednesday, with a focus on financial, semiconductor, and healthcare sectors.
Bank of America reported its Q3 earnings before the opening bell, and posted a net income of $8.5 billion, driven by strong investment banking and trading revenue, surpassing analysts’ expectations despite economic uncertainties.
Morgan Stanley and Abbott Laboratories will also release results, with markets closely watching loan growth, credit quality, and healthcare demand amid rising costs.
3. The rebound in stock markets came after Federal Reserve chief Jerome Powell recently indicated the Fed is nearing the end of its balance sheet reduction, hinting at potential rate cuts while emphasizing careful data monitoring amid economic uncertainties.
He highlight softening on the labour market and tariff induces challenges around inflation, underscoring the delicate balance between controlling inflation and supporting employment.
Powell called for a meeting-by-meeting” approach, with rate cuts in the schedule, but no precise timeline given, especially due to the government shutdown affecting economic data flow.
4. The automotive industry is raising alarms over China’s tightened restrictions on rare earth exports, crucial for electric vehicle batteries and semiconductors.
China’s Ministry of Commerce recently imposed new export controls to prevent misuse in military and sensitive areas, escalating previous limitations from April 2025.
European automakers, particularly in Germany, face supply chain disruptions affecting battery and semiconductor deliveries.
China produces about 60% of the world’s rare earth minerals, creating a significant bottleneck as demand for clean energy technologies surges.
Industry groups urge European policymakers to engage diplomatically with China for a swift resolution to secure supplies.
5. On Thursday, Asian markets bounced back, with Japan’s Nikkei jumping 1.8%, South Korea’s Kospi climbing 2.7%, and China’s main indexes up more than 1%.
Investors were feeling hopeful about potential Fed rate cuts and easing inflation pressures in China.
Over in Europe, stocks also rose, led by a huge 12% jump in LVMH shares after the luxury giant posted strong Q3 results, boosting the whole luxury sector.
The Stoxx Europe 600 gained 0.8%, and while investors were generally cautiously optimistic, worries about US-China trade tensions and other geopolitical risks lingered.
Meanwhile, the dollar softened, gold hit new highs, and all eyes stayed on any hints from the Federal Reserve about future policy moves.
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