Morgan Stanley Research says the U.S. will continue trade negotiations but not eliminate tariffs.

U.S. stock futures jumped in Wednesday’s overnight session, driven by a couple of upbeat catalysts. 

Wall Street’s AI darling, Nvidia Corp. (NVDA), reported “robust” results, boosting tech peers.

Also, in a setback to President Donald Trump’s plans, the U.S. Court of International Trade ruled that the retaliatory tariffs exceeded any authority granted to the president, calling them “unlawful.”

The Russell 2000 futures led the charge, with a 2.48% jump, as of 11:20 p.m. ET. The Nasdaq 100 and S&P 500 futures rallied 1.95% and 1.65%, respectively, and the Dow futures were up a more modest 1.35%.

Crude oil futures extended their gains overnight, while gold futures slipped.

The 10-year Treasury note yield rose 1.8 basis points to 4.497%, building on the gains from the previous session.

The U.S. dollar rallied across the board amid the U.S. trade court ruling.

Asian stocks were mostly higher, led by Japan’s Nikkei 225 Average, which benefited from the yen’s weakness.

The economic calendar for the day includes the revised first-quarter GDP data, the weekly jobless claims, the National Association of Realtors pending home sales index for April, and several speeches by Federal Reserve officials.

Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee, Fed Governor Adriana Kugler, and San Francisco Fed President Mary Daly are all lined up for the day.

Key earnings reports for the day include those from Best Buy (BBY), Foot Locker (FL), Hormel Foods (HRL), Kohl’s (KSS), Li Auto (LI), Ambarella (AMBA), American Eagle (AEO), Costco (COST), Elastic (ESTC), Dell (DELL), Gap (GPS), Marvell Technology (MRVL), NetApp (NTAP), PagerDuty (PD), UiPath (UI), Ulta Beauty (ULTA) and Zscaler (ZS).

Stocks performed lacklusterly on Wednesday before closing moderately lower, as traders digested the Fed’s May meeting minutes and remained apprehensive ahead of Nvidia’s earnings.

Morgan Stanley Research forecasts a slowdown in the global economy in 2025 and 2026, premised on expectations that the U.S. will continue trade negotiations but not eliminate tariffs.

Morgan Stanley’s Chief Global Economist, Seth Carpenter, said, “The economic damage is underway, and even fully undoing the tariffs would not restore global growth to where it would have been without them.”

He added that a re-escalation of tariffs to April’s peak rates would likely lead to recession in the U.S. and, by extension, the rest of the world.

The Invesco QQQ Trust (QQQ) ETF and the SPDR S&P 500 ETF (SPY) ended Wednesday’s session down 0.44% and 0.58%, respectively.

The SPDR Dow Jones Industrial Average ETF Trust (DIA) fell 0.57%, and the iShares Russell 2000 ETF (IWM) retreated 1.05%.

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