Wall Street was poised for a higher open on Wednesday, even as data showed the U.S. economy shrank at a steeper pace than expected.

Investors are also awaiting comments from the U.S. Federal Reserve on the state of the economy and are hopeful for signs the recession is abating.

Stock futures pared gains but remained higher following government data that showed gross domestic product dropped more than expected in the first quarter.

It's not as bad as it looks. The headline figure shows a dramatic decline, but that was driven by a decline in government spending, which we know is temporary, said Michael Darda, chief economist and market strategist at MKM Partners LLC in Greenwich, Connecticut.

It's worth noting that (consumer spending) was positive and better than expected.

On the earnings front, shares of Time Warner Inc rose 5.2 percent to $22.90 after the media group posted flat first-quarter profit, weighed by a drop in advertising sales.

Qwest Communications International Inc gained 6.4 percent to $3.80 after the telecommunications company posted better-than-expected results amid cost cutting.

S&P 500 futures rose 8.40 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 62 points, and Nasdaq 100 futures added 12.25 points.

The Fed will make a statement in the afternoon at the end of its two-day policy meeting, and economists expect it to hold its target range for its benchmark funds rate steady at near zero, as it has since December.

In addition to aggressively slashing interest rates, the Fed has launched a $1.15 trillion program to purchase mortgage debt and long-dated Treasury securities.

U.S. markets may get a boost from positive earnings in Europe after Germany's Siemens AG reported strong numbers and Spain's Banco Santander SA beat forecasts. The results sent European shares higher.

Bank of America Corp holds its annual shareholder meeting in North Carolina amid media reports it may have to raise more capital.

Shareholders are to vote on whether Chief Executive Kenneth Lewis should stay on the board, or at least give up his job as chairman.

The Wall Street Journal reported Lewis may be forced to relinquish the chairman job but is set to win re-election to the bank's board by a wide margin.

Shares in E*Trade Financial Corp slid 25.6 percent at $1.83 in early electronic trading, a day after the retail brokerage said it is facing regulatory pressure to boost capital as it posted its seventh straight quarterly loss.

Stocks fell Tuesday as fresh worries that major banks may need to raise more money offset reassuring economic data and a big dividend boost from IBM .

The Dow is up 22.5 percent from its 12-year closing low on March 9. For the month of April alone, the Dow is up 5.4 percent. But it remains down 8.7 percent for the year.

(Reporting by Leah Schnurr; additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)