Key Points:
- Dow futures jumped 0.9% as Wall Street closely watched the high-stakes summit between the United States and China.
- President Donald Trump and Chinese President Xi Jinping reported highly positive progress during their talks in Beijing.
- The US government allowed 10 Chinese companies to purchase powerful Nvidia H200 artificial intelligence chips.
- Cisco Systems announced plans to cut 4,000 jobs and take a $1 billion charge to focus on artificial intelligence.
Stock futures climbed higher on Thursday morning as investors aggressively bought shares. Wall Street watched closely as enthusiasm for new artificial intelligence technology grew across the market. Traders also waited for official updates from a highly anticipated diplomatic meeting between American and Chinese leaders. By 09:01 Eastern Time, Dow futures were up 0.9%. At the same time, S&P 500 futures gained 0.3%, and Nasdaq 100 futures advanced 0.1%.
These morning gains followed a very strong trading session on Wednesday. The benchmark S&P 500 index reached a brand new all-time high as buyers flooded the market. The technology-heavy Nasdaq Composite spiked by an impressive 1.2%. However, the blue-chip Dow Jones Industrial Average lagged behind the other major indexes. The Dow fell slightly, dipping by 0.1% to end the trading day.
In Beijing, President Donald Trump praised his ongoing meetings with Chinese President Xi Jinping. Trump described the high-stakes discussions as extremely positive and constructive for both nations. During a lavish state banquet, the American president called Xi a close friend and said his welcome in China felt magnificent. Trump openly invited Xi to visit the United States in September. Xi responded that the two major nations must act as partners rather than rivals. However, the Chinese leader stressed that stable ties require deep mutual respect.
Technology and global trade dominated the early diplomatic talks. The US government recently allowed about 10 Chinese companies to buy Nvidia’s highly advanced H200 artificial intelligence chips. While Nvidia has not delivered any of these chips yet, the company clearly wants to secure the massive market. Nvidia Chief Executive Officer Jensen Huang traveled directly to China with Trump. This high-profile trip makes investors believe the two countries will finally unlock major chip sales and sign new trade deals. Meanwhile, US Treasury Secretary Scott Bessent told reporters that he expects China to announce massive new orders for Boeing airplanes very soon.
Bessent added that the Commerce Department handles the specific rules regarding the Nvidia chips. Despite the political hurdles, investors still poured money into semiconductor stocks. Analysts at Vital Knowledge noticed a clear division in the market. While hardware companies surged, software and service businesses completely missed the current stock rally. Deutsche Bank analysts explained that positive sentiment toward giant technology companies drove the entire market higher. Everyone on Wall Street simply waited for positive news from the Trump-Xi meeting.
Traders also digested some difficult inflation numbers this week. The latest US producer price index came in much hotter than economists expected. This marked the second straight day of painfully high inflation reports. Market experts blame the ongoing war in Iran for the rising costs. The military conflict completely closed the Strait of Hormuz, a critical waterway that handles a fifth of all global oil shipments. Brent crude oil futures now sit above $105 a barrel. Before the war started, oil cost roughly $70 a barrel.
On Thursday, the US Census Bureau released new retail data that showed a slight slowdown in consumer spending. Retail sales increased by exactly 0.5% in April. This matched what financial experts predicted, but it showed a clear drop from the massive 1.6% jump recorded in March. Separately, the Department of Labor reported that 211,000 Americans filed for initial unemployment benefits last week. This number came in higher than the expected 205,000 claims. Continuing jobless claims also climbed by 24,000 to 1.782 million.
The US Senate made a major leadership change on Wednesday afternoon. Lawmakers confirmed Kevin Warsh as the new chair of the Federal Reserve. Warsh officially replaces outgoing chair Jerome Powell at a very difficult time for the economy. The new central bank leader must fight rising consumer prices caused by high oil costs. At the same time, Warsh faces intense political pressure from Trump. The president frequently demands quick and aggressive interest rate cuts to boost the stock market.
In corporate news, Cisco Systems announced a massive business overhaul to focus its energy entirely on artificial intelligence. The networking equipment provider plans to cut roughly 4,000 jobs worldwide. This represents about 5% of its total global workforce. The company will take a significant $1 billion charge to cover severance packages for workers and other related transition costs. Cisco shares jumped in early-morning trading after executives revealed the new strategy.
Cisco expects to record about $450 million of these charges during the fourth quarter of fiscal year 2026. The company will recognize the remaining financial costs throughout fiscal year 2027. Chief Executive Officer Chuck Robbins spoke to investors during a special phone call. He told them that the company simply lacks the right people in the correct technology departments. Robbins explained that the job cuts are intended to shift money into new areas of artificial intelligence rather than simply save cash.
