U.S. equity futures edged higher on Thursday as traders turned their attention to another key inflation release and continued to assess results from major technology companies. Cisco Systems (NASDAQ:CSCO) slipped after the closing bell despite reporting a sharp increase in profit and revenue supported by artificial intelligence-related demand, while Applied Materials (NASDAQ:AMAT) is set to deliver its latest results later in the day. Markets are also watching the escalating dispute between Washington and Tehran over the Strait of Hormuz, with both sides claiming control of the crucial oil transit route.
U.S. futures point to a firmer open
Futures tied to Wall Street’s major benchmarks moved modestly higher ahead of Thursday’s session as investors balanced easing consumer inflation against another busy day for corporate earnings.
At 02:58 ET (06:58 GMT), Dow futures were higher by 26 points, or 0.1%. S&P 500 futures increased by 6 points, also 0.1%, while Nasdaq 100 futures climbed 29 points, equivalent to 0.1%.
U.S. equities finished Wednesday on a mixed note. The S&P 500 and Nasdaq Composite gained ground, while the Dow Jones Industrial Average slipped slightly.
Markets were supported by July consumer inflation figures showing a modest slowdown in the annual rate, broadly in line with economists’ forecasts. Although inflation remains high in absolute terms, the data strengthened expectations that the Federal Reserve will keep borrowing costs unchanged when policymakers meet in September rather than opt for another rate increase.
Treasury yields declined following the release, while the dollar weakened against a group of major currencies.
Cisco delivers strong quarter as AI orders accelerate
Cisco Systems shares came under pressure in extended-hours trading even though the networking technology group reported another strong quarter.
The muted share-price reaction reflected the high expectations already built into the stock, according to analysts cited by Reuters. Cisco shares have gained more than 60% this year as investors increasingly view the company as a beneficiary of expanding spending on artificial intelligence infrastructure.
CEO Chuck Robbins told the Wall Street Journal that demand across Cisco’s product portfolio was running at levels the company had not experienced in three decades. Large technology companies have placed billions of dollars of orders as they continue to invest heavily in AI computing and networking capacity.
Robbins described the AI boom as the “fastest-moving technology transition” Cisco has ever seen, according to the WSJ.
The company reported July-quarter net profit of $3.86 billion, or $0.97 per share, while revenue rose to $17.25 billion from $14.67 billion in the prior-year period. The top-line result came in above Wall Street forecasts.
Cisco also issued a stronger-than-expected revenue outlook for fiscal 2027, forecasting between $72.2 billion and $73.4 billion. Orders for AI infrastructure from hyperscale customers are projected at around $7.5 billion.
Applied Materials next in the earnings spotlight
Investors will also be watching Applied Materials, with the semiconductor equipment manufacturer due to report after Thursday’s market close.
Bloomberg consensus forecasts point to adjusted fiscal third-quarter earnings of $3.42 per share on net sales of $9.02 billion.
For the current quarter, analysts are looking for guidance of approximately $9.62 billion in sales and adjusted earnings of $3.72 per share.
The continuing expansion of artificial intelligence infrastructure has supported demand for advanced semiconductor manufacturing equipment. More powerful AI processors require greater quantities of silicon wafers and increasingly sophisticated production technologies, creating favourable conditions for suppliers such as Applied Materials.
In May, the company forecast more than 30% growth in its semiconductor equipment business during 2026, alongside an increase of more than 50% in packaging revenue. CEO Gary Dickerson said Applied Materials sees “an exceptionally strong foundation for sustained multi-year revenue and profit growth.”
Hormuz dispute adds to geopolitical uncertainty
Geopolitical developments remain another important driver for markets as the conflict in the Middle East continues to threaten regional energy flows.
On Thursday, the commander of an Iranian paramilitary group said the Strait of Hormuz was “under Iran’s control,” according to Al Jazeera, directly contradicting U.S. President Donald Trump’s claim a day earlier that Washington controlled the waterway.
Diplomatic efforts between the U.S. and Iran have stalled once again, with the two governments offering opposing accounts of conditions around the strait. The route carried roughly one-fifth of global oil supplies before the conflict began in late February.
An Iranian source told Reuters that talks aimed at restoring a peace framework signed in June had failed to make progress as continued fighting undermined the agreement.
Brent crude futures nevertheless edged lower on Thursday as concerns surrounding the outlook for global oil demand offset some of the fears about restricted supply.
Markets await July producer inflation
The next major macroeconomic focus will be July’s U.S. producer price index, which is expected to provide another indication of inflationary pressures ahead of the Federal Reserve’s September policy meeting.
Annual PPI inflation is forecast to ease to 4.9% from 5.5%, while the monthly reading is expected to rise by 0.2% after declining 0.3% in June.
Investors will be assessing not only the impact of volatile energy prices associated with the Iran conflict but also whether the rapid build-out of AI infrastructure is beginning to create broader cost pressures across the economy.
The combination of CPI and PPI data will also allow economists to update their expectations for the upcoming core personal consumption expenditures price index, a closely watched inflation gauge used by the Federal Reserve.
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