Major US indexes rose Thursday morning as a surprise producer price report showed wholesale inflation cooling more than expected. The Nasdaq composite led gains while Cisco Systems fell after its fiscal fourth-quarter results, and rival AI hardware maker Cerebras Systems dropped even further despite beating sales estimates.
Just after Thursday's open, the Dow industrials rose 0.5%, lagging gains of 0.8% by the S&P 500 and 1% by the tech-heavy Nasdaq composite in morning trading. The Invesco QQQ later accelerated its gain to 1.2%, while the SPDR S&P 500 ETF moved 0.8% higher after opening up just 0.2%.
Producer prices cool more than forecast
Early Thursday, the Labor Department said the producer price index was unchanged in July, with a 4.7% year-over-year increase, cooler than economists' forecast of a 0.2% monthly gain and 4.9% annual rise. Core PPI, which excludes food and energy, rose 0.2% on the month with a 4.2% annual increase that matched estimates, though it came in below the forecast 0.3% monthly gain.
Weekly initial jobless claims told a different story. Claims rose to 209,000, above the 199,000 recorded the prior week and above the 203,000 economists expected. Elsewhere, the 10-year Treasury yield dropped nearly eight basis points to 4.61% as investors grew more confident inflation is moderating.
Cisco slides despite topping estimates
Cisco Systems stock tumbled more than 7% even after the networking giant reported fiscal fourth-quarter earnings and revenue that topped estimates as AI-related product orders accelerated. The San Jose-based company posted a 23% rise in earnings to $1.22 a share, its seventh straight quarter of bottom-line growth, while sales rose 18% to $17.3 billion. Its fiscal 2027 sales outlook also came in above expectations.
Still, gross margin fell more than 200 basis points from a year ago to 66.3%, which may reflect rising memory chip and data storage costs. Cisco stock remains up nearly 49% for the year despite the drop. Meanwhile, AI chipmaker Cerebras Systems plunged more than 15% in premarket trading despite beating its second-quarter sales target and issuing a full-year outlook well above views.
Source: Investor's Business Daily
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