U.S. stocks closed at record highs on Thursday, with the Dow Jones Industrial Average breaching the 50,000 mark for the first time. The blue-chip index gained 370.26 points, or 0.75%, to finish at 50,063.46, while the S&P 500 rose 0.77% to 7,501.24 and the Nasdaq Composite climbed 0.88% to 26,635.22. The rally was fueled by artificial-intelligence-related gains, particularly in networking and semiconductor stocks, which lifted the broader market.
AI Demand Drives Cisco and Nvidia Higher
Cisco Systems was a standout, surging after the company raised its annual revenue outlook and announced that orders for AI infrastructure from hyperscale customers are now expected to reach $9 billion in the current fiscal year, far exceeding the prior target of $5 billion. The networking giant also revealed plans to cut approximately 4,000 jobs, redirecting resources toward silicon, optics, security, and AI technologies. CEO Chuck Robbins cited "very strong, broad-based demand" in comments to the Associated Press, and the stock's price-weighted influence helped propel the Dow.
Nvidia jumped 4.4% after the U.S. government approved the sale of its H200 chips to Chinese companies, a move that underscores the chipmaker's dominant position in AI hardware. However, the gains were not uniform across the sector: Qualcomm, Intel, Sandisk, and Micron all fell sharply, dropping between 3.4% and 6.1%, as investors reassessed which companies stand to benefit most from the AI boom.
Cerebras Systems Soars in IPO
AI chip startup Cerebras Systems made a stunning public debut, with shares surging 68.2% on their first day of trading. The strong reception highlights continued investor appetite for AI-related companies, even as some parts of the semiconductor industry face headwinds. BlackRock strategist Gargi Pal Chaudhuri noted that this remains an "AI-led market," with earnings trends reinforcing the momentum across semiconductors, infrastructure, and even segments of the industrial economy.
Macro Data Mixed, But Fed Rate Cut Hopes Dim
Economic data released Thursday painted a mixed picture. April retail sales rose 0.5%, while jobless claims ticked higher to 211,000, still at relatively low levels. However, import prices surged 1.9%, the largest monthly increase since March 2022, driven by a 16.3% spike in fuel imports. The data reinforced the narrative of a resilient economy but also fanned inflation fears, complicating the Federal Reserve's path on interest rates.
Kansas City Fed President Jeffrey Schmid described inflation as the "pressing risk" facing the economy, echoing the hawkish stance of some central bank officials. Prediction markets reflected dimming expectations for rate cuts: Kalshi's contract for the June Fed meeting showed a 97% probability of no change, while Polymarket indicated a 72% chance of no cuts at all in 2026. Richard de Chazal, macro analyst at William Blair, said steady consumer spending and a solid labor market are likely to keep rates "higher for longer."
Geopolitical and Energy Risks Loom
Investors also kept an eye on geopolitical developments, as President Donald Trump met with Chinese President Xi Jinping to discuss trade, Taiwan, and the Strait of Hormuz. Michael Monaghan, portfolio manager at Founder ETFs, described the talks as "very high stakes" and noted that both economies would benefit from cooperation. Meanwhile, oil prices remained a key concern, with Byron Anderson of Laffer Tengler Investments stating, "Whatever oil does is where yields are going." Elevated Treasury yields could make equities less attractive, particularly if energy shocks or a more aggressive Fed materialize.
After-hours trading showed consolidation rather than a pullback, with investors maintaining their bets on AI-driven earnings and a resilient consumer. However, the risk side of the ledger remains unchanged: renewed energy shocks, a more aggressive Fed, or stalled China talks could quickly shift sentiment.
