Gold prices edge lower; heading for weekly losses ahead of U.S.-Russia talks
Investing.com - U.S. stock futures hovered around the flatline on Thursday, following another day of fresh record highs for global equities that was fueled in large part by expectations that the Federal Reserve will soon lower interest rates. Meanwhile, Cisco Systems’ current-quarter guidance exceeds estimates, as the networking equipment firm anticipates ongoing support from a spike in corporate spending on artificial intelligence. Data is also set to be released which could provide new insight into the state of the U.S. economy.
1. Futures subdued
U.S. stock futures were muted on Thursday, suggesting a breather may be ahead after global equity markets surged to a record high for a second consecutive session.
By 03:49 ET (07:49 GMT), the Dow futures contract was mostly unchanged, S&P 500 futures had slipped by 5 points, or 0.1%, and Nasdaq 100 futures had dipped by 21 points, or 0.1%.
The main averages also rose on Wednesday, with the benchmark S&P 500 and tech-heavy Nasdaq logging new all-time peaks and the blue-chip Dow Jones Industrial Average jumping by more than 1%.
Underpinning the rally were expectations that the Federal Reserve will slash interest rates at its next meeting in September, as officials respond to signs of relatively muted inflationary pressures and cooling in the American labor market.
Adding fuel to traders’ dovish bets was U.S. Treasury Secretary Scott Bessent, who said he believed a more aggressive half-point rate cut by the Fed was potentially on the table due partially to sharp downward revisions to job growth in June and May.
Still, analysts at ING flagged that "markets aren’t pricing in anything over [a 25-basis point drawdown] for now," and argued that a 50-basis point option would probably not be taken seriously unless there are some hints in that direction at a closely-watched economic symposium in Jackson Hole, Wyoming later this month or the August jobs report "hugely disappoints again."
2. Cisco earnings
Shares of Cisco Systems did not stray too far from the flatline in extended hours trading after the networking equipment group announced a stronger-than-anticipated first-quarter revenue outlook, but noted some impact from sweeping U.S. tariffs during its just-ended fiscal year.
Cisco is viewed as a possible beneficiary of a boom in spending by companies looking to beef up their artificial intelligence capabilities in order to meet surging demand for the nascent technology. These include mega-cap industry giants like Amazon and Google-parent Alphabet, who have set forth plans to increase AI spending despite a string of massive outlays in recent quarters.
Against this backdrop, AI infrastructure orders at Cisco surpassed $800 million in its fiscal fourth quarter, pushing its annual total up to over $2 billion, CEO Chuck Robbins told investors in a post-earnings call on Wednesday. That is more than double Cisco’s initial target.
Revenue in the quarter ended on July 26 came in at $14.67 billion, versus estimates of $14.62 billion. But executives said total gross profit margins for the period were dented by a "small impact" from U.S. tariffs on copper, steel and aluminum, adding that the levies are contributing to a "complex" operating environment.
Still, for its current quarter, Cisco expects to register a top-line figure of $14.65 billion to $14.85 billion, compared with projections of $14.62 billion.
Investors will have the chance to parse through more earnings on Thursday, including results from U.S.-based computer chip equipment supplier Applied Materials (NASDAQ:AMAT) after the closing bell.
3. July PPI and jobless claims ahead
Meanwhile, economic data is due out that could offer a fresh glimpse into the trajectory of the American economy.
A reading of U.S. producer prices for June is tipped to accelerate slightly. Analysts have been curious to see if a tariff-fueled increase in the cost of some goods will be offset by relatively tepid services expenses, as it was in June.
Earlier this week, a separate gauge showed that consumer price gains remained broadly muted in July, although some observers noted that the full impact of President Donald Trump’s aggressive trade agenda could be coming in the months ahead.
Elsewhere on Thursday, weekly claims for first-time unemployment benefits are set to be unveiled, with economists not anticipating much change in the figure. Markets and policymakers alike have been keeping close tabs on developments in labor demand, especially as recent softening in the jobs picture is being touted as perhaps the key motive for the Fed to resume a cycle of rate cuts it paused in December.
4. DeepSeek delays new AI model - FT
DeepSeek has delayed the release of its new artificial intelligence model as training efforts using Huawei chips fell through, the Financial Times reported on Thursday, citing three people familiar with the matter.
The Chinese AI start-up encountered persistent technical issues when training its R2 model using Huawei’s Ascend chips, the report said, prompting it to use Nvidia chips for training and Ascend for inference, the FT reported.
The issues were the main reason why Deepseek’s highly anticipated R2 model launch was delayed from May, the report said.
The FT report highlights the difficulties faced by Chinese AI developers in reducing their reliance on U.S. tech, specifically Nvidia’s AI chips. DeepSeek and its peers were encouraged by Beijing to use Huawei’s Ascend chips earlier, especially as U.S. chip exports to China became a major point of contention this year.
5. Bitcoin notches fresh record high
Bitcoin hit a record high on Thursday, as the world’s largest cryptocurrency was bolstered by Fed rate cut wagers and optimism over more corporate buying.
Lower rates stand to support crypto prices by freeing up more liquidity for investing in speculative assets.
Bitcoin was also buoyed by more companies adopting a treasury strategy popularized by Michael Saylor’s MicroStrategy Incorporated (now Strategy). Metaplanet, the world’s sixth-largest corporate holder of Bitcoin, disclosed the purchase of over $60 million in the digital token earlier this week and said it is raising billions of dollars in fresh capital to buy more.
Earlier in August, Strategy also unveiled a major Bitcoin purchase, bringing its total holdings to to over 628,000 coins.