U.S. stock futures traded higher on Thursday, with the Nasdaq positioned for additional gains after the technology-heavy index closed at a fresh record high in the previous session.
Technology shares looked set to extend their recent rally following strong earnings-related momentum from Cisco Systems (NASDAQ:CSCO).
Shares of Cisco surged 14.5% in premarket trading after the company delivered fiscal third-quarter results ahead of expectations and issued upbeat forward guidance. The networking giant also announced plans to reduce its workforce by nearly 4,000 positions.
Nvidia Gains on China H200 Chip Report
Nvidia (NASDAQ:NVDA) also posted strong premarket gains after Reuters reported that the U.S. had approved around 10 Chinese companies to purchase Nvidia’s H200 chip, its second-most powerful artificial intelligence processor.
The development comes during a closely watched summit in Beijing between Donald Trump and Chinese President Xi Jinping.
Following a nearly two-hour meeting at the Great Hall of the People, Trump described the discussions as “great.”
The White House stated, “The two sides agreed that the Strait of Hormuz must remain open to support the free flow of energy.”
Meanwhile, China’s foreign ministry said both leaders agreed to pursue a “constructive strategic stable relationship” as the framework for bilateral ties over the next three years and beyond.
Nasdaq and S&P 500 Reach Record Closing Highs
Driven by strong gains in technology stocks, the Nasdaq rallied sharply on Wednesday and finished at another all-time closing high.
The S&P 500 also reached a fresh record close, while the narrower Dow Jones Industrial Average ended slightly lower after posting modest gains earlier in the week.
The Dow declined 67.36 points, or 0.1%, to close at 49,693.20. The S&P 500 rose 43.29 points, or 0.6%, to 7,444.25, while the Nasdaq jumped 314.14 points, or 1.2%, to 26,402.34.
Semiconductor Stocks Lead Market Higher
Chipmakers played a major role in the Nasdaq’s advance, with the Philadelphia Semiconductor Index climbing 2.6%.
Nvidia (NASDAQ:NVDA) was among the strongest performers after chief executive Jensen Huang joined Trump’s China delegation at the last minute ahead of meetings with Xi Jinping.
Dow Weighed Down by Salesforce and Blue Chips
The Dow’s weaker performance was partly driven by a 3.2% decline in shares of Salesforce (NYSE:CRM).
Additional losses from IBM (NYSE:IBM), Home Depot (NYSE:HD) and Visa (NYSE:V) also pressured the blue-chip index.
Inflation Data Raises Rate Concerns
Markets also reacted to new inflation data from the U.S. Labor Department showing producer prices rose significantly more than expected in April.
The producer price index for final demand increased 1.4% during the month after an upwardly revised 0.7% gain in March. Economists had expected a rise of 0.5%.
The monthly jump marked the largest increase since March 2022, when producer prices climbed 1.7%.
Annual producer price inflation accelerated to 6.0% in April from 4.3% in March, exceeding economist forecasts for 4.9% growth and marking the fastest annual increase since December 2022.
Economists Warn Inflation Could Stay Elevated
“The jump in input prices portends further increases for consumer prices in May,” said Ben Ayers, senior economist at Nationwide. “We expect annual CPI inflation to move above 4.0 percent in May with energy prices still highly elevated more than two months into the Iranian conflict.”
He added, “With inflation still trending higher, we expect the hawkish wing of the FOMC to advocate for an extended pause in interest rates even with incoming Fed Chair Kevin Warsh likely to prefer to lower rates over time.”
Utilities and Housing Stocks Under Pressure
Following the inflation report, sectors sensitive to interest rates, including utilities and housing stocks, moved lower during Wednesday’s session.