Dow Futures show a slight increase, as market participants anticipate a fresh set of crucial inflation metrics and upcoming corporate earnings reports. Cisco Systems shares experienced a decline in after-hours trading, as the networking equipment provider’s robust earnings driven by artificial intelligence faced high expectations. Meanwhile, AI chip gear supplier Applied Materials is set to report its results after the market close. In other developments, the United States and Iran offer divergent narratives regarding the control of the Strait of Hormuz, as both parties continue to be at an impasse concerning an agreement to restore access to this crucial maritime route.

Dow futures indicated an upward trajectory on Thursday, as investors analysed July inflation data and examined a series of earnings reports from the technology sector. By 02:58, the Dow futures contract had increased by 26 points, or 0.1%, the S&P 500 futures had risen by 6 points, or 0.1%, and the Nasdaq 100 futures had advanced by 29 points, or 0.1%. The primary indices on Wall Street exhibited a mixed performance on Wednesday. The benchmark S&P 500 and tech-heavy Nasdaq Composite experienced gains, whereas the blue-chip Dow Jones Industrial Average saw a slight decline. Hovering over sentiment were figures indicating a modest deceleration in annualised U.S. consumer price growth last month, aligning with expectations. However, the key gauge remains elevated on an absolute basis. The numbers strengthened expectations that the Federal Reserve will choose to maintain interest rates at its upcoming policy meeting in September, rather than increase borrowing costs in an effort to manage inflationary pressures. U.S. Treasury yields declined in the aftermath of the report, while the dollar experienced a depreciation against a range of currencies.

Shares of Cisco Systems experienced a decline in extended-hours trading on Wednesday, despite the networking equipment provider reporting strong quarterly results. Analysts noted that expectations for the company were exceptionally elevated as it approached the earnings report. Cisco’s stock has surged by more than 60% so far this year, reflecting the benefit from runaway demand for the gear needed to underpin artificial intelligence infrastructure. CEO Chuck Robbins stated to the Wall Street Journal that Cisco has not encountered this magnitude of demand across its entire portfolio in thirty years. The company has secured billions of dollars in orders from large technology firms that are increasingly allocating substantial resources to the advancement of their artificial intelligence systems. Robbins characterised the AI boom as the “fastest-moving technology transition” that Cisco has ever encountered, according to the source. Against this backdrop, Cisco reported a notable increase in July-quarter profit to $3.86 billion, or $0.97 per share. Revenue also increased to $17.25 billion, up from $14.67 billion the previous year and exceeding Wall Street expectations. Cisco has provided guidance for fiscal 2027 revenue in the range of $72.2 billion to $73.4 billion, exceeding expectations. Additionally, AI infrastructure orders from hyperscalers are projected to reach $7.5 billion.

Meanwhile, AI chip equipment supplier Applied Materials is set to announce its latest results following the market’s close on Thursday. The group is anticipated to report adjusted fiscal third-quarter earnings per share of $3.42, alongside net sales of $9.02 billion, as per consensus estimates. For the current quarter, Applied Materials is expected to provide guidance for net sales of $9.62 billion and adjusted per-share income of $3.72. The AI era’s seemingly insatiable demand for advanced AI chips has propelled semiconductor equipment suppliers such as Applied Materials, as these processors necessitate an increased supply of silicon wafers and more sophisticated manufacturing tools. In May, the firm projected growth exceeding 30% in its chip equipment unit and a rise of over 50% in packaging revenues by 2026. CEO Gary Dickerson informed investors that the company perceives “an exceptionally strong foundation for sustained multi-year revenue and profit growth.”

Beyond corporate earnings, the ongoing conflict in the Middle East and the associated concerns regarding potential disruptions to regional oil supply flows persist in dampening market sentiment. On Thursday, the leader of an Iranian paramilitary organization stated that the Strait of Hormuz is “under Iran’s control,” as reported by Al Jazeera. The comments dismissed U.S. President Donald Trump’s recent assertion that Washington had control over the narrow waterway. Discussions between Washington and Tehran have once again reached an impasse, as both parties offer divergent accounts regarding control over the strait, a crucial conduit for approximately one-fifth of global oil shipments prior to the onset of their conflict in late February. An Iranian source indicated that there has been no advancement in discussions aimed at revitalising a framework peace agreement that was established in June, yet has since appeared to be undermined by ongoing hostilities. Nonetheless, benchmark Brent crude futures experienced a slight decline on Thursday, as apprehensions regarding demand counterbalanced supply limitations.

Attention now shifts to the imminent publication of the U.S. producer price index for July, which may provide investors with greater clarity regarding the inflation landscape ahead of the Federal Reserve’s meeting next month. In line with Wednesday’s CPI data, producer price growth is anticipated to moderate to 4.9% from 5.5% on an annualised basis, while the month-on-month figure is projected to recover to 0.2% following a decline of 0.3% in June. Alongside the influence of energy price fluctuations stemming from the Iran conflict, analysts are expected to monitor the implications of the AI build-out on price increases. With both the CPI and PPI readings available, economists will be positioned to formulate more nuanced forecasts for the forthcoming core personal consumption expenditures price index — a favoured inflation metric of the Fed.