U.S. equity futures traded higher on Thursday as investors balanced optimism surrounding artificial intelligence against geopolitical uncertainty linked to the summit between Donald Trump and Xi Jinping.
Meanwhile, crude oil prices stayed above the $100-per-barrel mark as markets looked for potential diplomatic progress regarding the conflict involving Iran. Shares of Cisco Systems (NASDAQ:CSCO) also jumped after the company announced a major restructuring initiative tied to artificial intelligence, while Kevin Warsh was formally confirmed as the next chair of the Federal Reserve.
Futures Climb as AI Momentum Continues to Support Tech
As of 03:40 ET, futures tied to the Dow Jones Industrial Average were up 176 points, or 0.4%, while S&P 500 futures gained 18 points, or 0.2%. Nasdaq 100 futures led the advance with a rise of 144 points, or 0.5%, extending the strong performance in AI-related technology stocks.
Reuters reported that the U.S. government has approved approximately 10 Chinese firms to purchase Nvidia’s H200 artificial intelligence chip, currently the company’s second-most-powerful processor, although deliveries have not yet started.
Jensen Huang, chief executive of Nvidia, is accompanying Trump during the China visit, increasing speculation that discussions could pave the way for expanded H200 sales in China.
On Wednesday, the S&P 500 closed at another record high, while the Nasdaq Composite advanced 1.2%. The Dow Jones Industrial Average underperformed, slipping 0.1%.
Analysts at Vital Knowledge said semiconductor stocks rallied after reports that Huang joined Trump on the trip to China, while software and services companies “were not invited to the latest tech bacchanalia.” They added that broader market activity “wasn’t nearly as robust,” citing weakness in the equal-weight S&P 500 index.
Investors also largely dismissed stronger-than-expected U.S. producer inflation figures, marking the second consecutive day of upside surprises in inflation data.
“Equity bulls dismissed the PPI as simply a function of Iran and since the consensus view continues to anticipate an accord with Tehran, the assumption is that inflation will cool once that deal is reached,” the Vital Knowledge analysts said.
Trump and Xi Complete Opening Round of Summit Discussions
The initial phase of talks between Donald Trump and Xi Jinping wrapped up during the opening stage of the two-day summit in Beijing.
Chinese state media reported that Xi said negotiations — especially those focused on trade — were making progress, although he warned that continued tensions surrounding Taiwan could damage bilateral relations.
Markets are also closely monitoring whether the summit could produce diplomatic initiatives related to the Iran conflict. Some analysts believe Trump may attempt to secure Chinese support for a longer-term peace framework, given China’s role as a major importer of Iranian crude oil, although it remains unclear whether Beijing would be willing to take on such a role.
The summit is taking place against a backdrop of mounting global economic uncertainty caused by the ongoing closure of the Strait of Hormuz, the strategically important shipping route near Iran through which roughly 20% of the world’s oil supply moves.
Oil Prices Stay Elevated Amid Geopolitical Concerns
Crude prices continued to edge higher on Thursday, with analysts at ING Group saying traders are “eagerly awaiting the outcome of the meeting between [Trump and Xi], and whether it could yield some positive results on the Iran war.”
Brent crude remained above $105 a barrel, compared with levels near $70 before the escalation of the conflict.
The sharp rise in energy prices has intensified fears of renewed inflationary pressure worldwide, especially following recent U.S. consumer and producer inflation reports.
Analysts at Morgan Stanley warned that the energy shock could weigh on economic growth while also pushing inflation higher beyond energy-related sectors.
Cisco Shares Rally Following AI-Driven Restructuring Plan
Shares of Cisco Systems (NASDAQ:CSCO) surged in after-hours trading after the networking company announced a broad restructuring strategy centered on artificial intelligence.
Cisco said it expects to record approximately $1 billion in charges tied to severance payments and related expenses. The company also confirmed plans to cut roughly 4,000 positions, representing around 5% of its total workforce.
The group expects approximately $450 million of these restructuring costs to be recognised during the fourth quarter of fiscal 2026, with the remaining charges expected during fiscal 2027. Cisco said the majority of these costs will involve cash expenditures.
Chief executive Chuck Robbins told analysts following the earnings release that the company does not “always have the exact resources that we need going forward in the right places,” adding that the restructuring effort is more about reallocating resources “versus savings.”
The announcement comes as companies increasingly invest in AI processors and high-speed networking infrastructure required to support advanced data centres.
Cisco also raised its fiscal 2026 revenue guidance, now expecting revenue between $62.8 billion and $63 billion, compared with prior guidance of $61.2 billion to $61.7 billion.
Kevin Warsh Officially Confirmed as New Fed Chair
The U.S. Senate officially confirmed Kevin Warsh as the next chair of the Federal Reserve on Wednesday, placing the former banker and lawyer at the helm of the central bank as policymakers continue navigating rising inflation pressures.
The Senate vote followed approval of Warsh’s appointment to the Federal Reserve Board of Governors earlier in the week.
Warsh will succeed current Fed chair Jerome Powell once Powell’s term expires on Friday. Powell will remain on the Federal Reserve Board, while Fed governor Stephen Miran is expected to step down from his position to make way for Warsh.
