Tech Rally Rolls On as Cisco Highlights AI Fervor: Markets Wrap

(Bloomberg) — The rally in technology stocks remained intact as Cisco Systems Inc.’s earnings and a hot streak in Nvidia Corp. highlighted the momentum around artificial intelligence.

Nasdaq 100 futures rose 0.2%, with the index set for a third record high since Monday. S&P 500 contracts kept pace with a similar advance. Nvidia was poised to extend a run of six daily gains, climbing 1.8% in premarket trading. Cisco soared 16% on a raised sales forecast that also lifted network-equipment peers.

Some of the biggest chipmaking names took a breather. Qualcomm Inc. fell 4.3% while Intel Corp. slipped 3.9%, pausing a rally that has powered a basket of US semiconductor makers by nearly 60% since the beginning of April. Even so, strong demand for the sector remained evident as Cerebras Systems Inc. raised $5.55 billion in the biggest initial public offering so far this year.

Bonds posted modest gains in most markets, halting the recent rise in yields triggered by higher oil prices. The rate on 10-year Treasuries was little changed at 4.46%. Brent nudged higher above $106 a barrel. The dollar traded flat.

Chipmakers have led an unprecedented rebound in stocks, casting off the turmoil in markets spurred by the war in the Middle East. Big tech firms, including Nvidia, have also picked up pace as their executives joined President Donald Trump’s delegation to China.

“Ingredients for the big top in markets are still missing, namely multiple Fed hikes, wider credit spreads or an overheating growth pulse,” said Manish Kabra, chief US equity strategist at Societe Generale. “The bull case for the S&P 500 stays intact.”

Trump’s summit with Xi Jinping shifted the spotlight from the war in Iran that has left a key conduit for Middle East oil flows all but closed for more than two months. The Chinese leader signaled that Beijing is moving toward greater openness as traders look out for business deals and purchasing commitments from the world’s second-biggest economy.

“I would expect the summit to matter more for sentiment than for a grand policy reset,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “The market is likely looking for a de-escalation tone, fewer tariff threats, and no new restrictions on trade, technology, or geopolitics.”

The strength of the US consumer will be in focus later on Thursday after data released over the past two days showed a resurgence in inflation. Retail sales likely cooled in April as spending on gasoline provided a smaller lift and underlying demand likely softened, according to Bloomberg Intelligence.

“Markets will be looking for signs of price pressures,” said Geoff Yu, a senior macro strategist at BNY. “Volume versus value is the important comparison, as that could trigger further moves away from easing and hurt bonds.”

What Bloomberg Strategists Say:

“Investors are underpricing the prospect that the Federal Reserve may have to abandon its bias to cut interest rates. The melt-up in equities and tightening of credit spread mean that financial-market conditions are much looser than they need to be against the macroeconomic backdrop, and a central bank’s instincts would go against the idea of adding fuel to that fire.”

— Ven Ram, macro strategist. For the full analysis, click here.

Corporate Highlights:

Burberry Group Plc’s sales rose more than expected at the end of the fiscal year, indicating the turnaround under Chief Executive Joshua Schulman is paying off. 3i Group Plc slumped after the private equity firm flagged slowing sales at discount retailer Action — which represents more than two thirds of its portfolio value. Cisco Systems Inc. gained as much as 22% in premarket trading after the company delivered a better-than-anticipated sales forecast and announced plans to cut thousands of jobs, an attempt to focus on the fast-growing AI market. Cerebras Systems Inc. raised $5.55 billion in its US initial public offering, as the artificial intelligence chipmaker seizes on the surging demand for semiconductors. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 6:50 a.m. New York time Nasdaq 100 futures rose 0.2% Futures on the Dow Jones Industrial Average rose 0.6% The Stoxx Europe 600 rose 0.5% The MSCI World Index was little changed Currencies

The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1708 The British pound was little changed at $1.3513 The Japanese yen was little changed at 157.93 per dollar Cryptocurrencies

Bitcoin fell 0.3% to $79,475.29 Ether fell 0.2% to $2,258.41 Bonds

The yield on 10-year Treasuries was little changed at 4.46% Germany’s 10-year yield declined two basis points to 3.08% Britain’s 10-year yield declined two basis points to 5.04% Commodities

West Texas Intermediate crude rose 0.5% to $101.50 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.

–With assistance from Christian Dass and Subrat Patnaik.

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