The Dow Jones Industrial Average advanced 198.31 points, or 0.40%, to 49,891.51 in late-morning trading on Thursday, edging closer to the psychologically significant 50,000 level. The rally was fueled by a sharp post-earnings surge in Cisco Systems (CSCO) and renewed momentum in artificial intelligence-related stocks. The S&P 500 added 0.54%, while the Nasdaq Composite climbed 0.60%, both notching new intraday records, according to Reuters data from LSEG.
Cisco led the Dow's advance, with shares soaring as much as 17% to an all-time high. The networking equipment giant raised its full-year revenue outlook, citing strong demand for AI infrastructure. Cisco reported $5.3 billion in AI infrastructure orders from hyperscale customers in the current fiscal year and boosted its forecast for fiscal 2026 AI orders to $9 billion, up from $5 billion. Quarterly revenue for fiscal Q3 came in at $15.8 billion, a 12% year-over-year increase. The company also announced plans to cut nearly 4,000 jobs, redirecting resources toward AI, silicon, optics, and security. The move sent the stock toward its largest single-day percentage gain in over 20 years.
Nvidia (NVDA) also contributed to the market's strength, climbing roughly 3% after Reuters reported that U.S. authorities had approved sales of its H200 AI chip to about 10 Chinese firms. The development boosted Nvidia's market valuation to approximately $5.6 trillion and lifted the Nasdaq, offsetting pressure from sectors more sensitive to inflation concerns.
"This is still an AI-led market," said Gargi Pal Chaudhuri, a strategist at BlackRock, in comments to the Associated Press. "But the effects are now spreading into chips, infrastructure, and some industrial sectors." Cisco CEO Chuck Robbins pointed to "very strong, broad-based demand for our products," underscoring the breadth of the AI-driven cycle.
On the macro front, data offered a mixed picture. The Census Bureau reported that retail and food-services sales rose 0.5% in April from March, reaching $757.1 billion. Compared with April 2025, sales increased 4.9%. However, the figures are not adjusted for inflation. Meanwhile, the Labor Department said initial jobless claims increased by 12,000 to 211,000 for the week ended May 9, with the four-week moving average rising to 203,750.
The data did little to shift expectations for Federal Reserve policy. David Russell, global head of market strategy at TradeStation, told Reuters that consumers are "not in a recession, but they're not exactly powering the economy either." He added that the retail numbers were robust enough to "take the prospect of rate cuts off the table." According to the CME FedWatch tool, traders assigned a 28% probability to a quarter-point rate hike before year-end. On Polymarket, contracts priced a 98% chance the Fed leaves rates unchanged at the June 17 meeting, and a 72% probability of no rate cuts in 2026.
Fed officials reinforced the cautious tone. Boston Fed President Susan Collins flagged the possibility of more tightening if inflation does not ease, while Minneapolis Fed President Neel Kashkari said the central bank is "dead serious" about bringing inflation down. High bond yields, driven by persistent inflation, could turn the 50,000 level on the Dow into a profit-taking zone rather than a breakout point, analysts warned.
Despite the headwinds, the market's AI-led rally has shown remarkable resilience. The S&P 500 and Nasdaq continue to grind higher, supported by a tight cluster of big tech and AI-related names. Traders also kept an eye on U.S.-China trade discussions and geopolitical risks, including the potential for a prolonged Middle East conflict to exacerbate inflation.
As the Dow hovers near 50,000, the key question is whether Cisco's rally and AI enthusiasm can sustain the momentum into the close. With high yields and sticky inflation still overhanging the market, the threshold may prove as much a resistance as a milestone.
