Futures Rise; Non-Farm Employment Data Impact; Cisco Stock Declines — Market Trends

Investing.com - Futures linked to major U.S. stock indexes rose ahead of Thursday’s trading open, as markets have moved past the explosive U.S. employment report and shifted focus to more corporate earnings and key data this week. Cisco Systems’ stock plunged due to rising memory chip prices impacting the profit margins of this networking equipment supplier. Additionally, better-than-expected non-farm payrolls nearly erased market expectations of a rate cut by the Federal Reserve in the second half of 2026, putting pressure on gold prices.

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1. Futures Rise

U.S. stock index futures increased as investors turned their attention to a new batch of corporate earnings and upcoming inflation data.

As of 03:01 a.m. Eastern Time (16:01 Beijing Time), Dow futures were up 143 points, or 0.3%, S&P 500 futures up 22 points, or 0.3%, and Nasdaq 100 futures up 73 points, or 0.3%.

On Wednesday, major Wall Street indexes were flat, while U.S. Treasury yields rose, driven by employment data that far exceeded economists’ expectations, but delaying traders’ expectations for the Fed’s next rate cut.

At the close, the blue-chip Dow Jones Industrial Average fell 0.1%, but remained above the key 50,000 level it broke earlier this week. The benchmark S&P 500 ended flat, while the tech-heavy Nasdaq Composite declined 0.2%.

In individual stocks, Robinhood tumbled 8.9% after quarterly revenue fell short of expectations, and Moderna also declined after U.S. federal regulators decided not to review its new flu vaccine.

Software and brokerage stocks also came under pressure, reflecting recent market concerns that AI tools could disrupt these industries. However, a rebound in chip manufacturing stocks somewhat alleviated these losses.

2. Impact of Non-Farm Payroll Data

Tuesday’s focus was mainly on how the January non-farm employment data accurately reflect the U.S. economy—what these figures mean for the Federal Reserve’s interest rate policy in 2026.

Although the U.S. economy added a strong 130,000 jobs last month and the unemployment rate fell to 4.3%, analysts emphasized that most of the job growth was concentrated in a specific sector: healthcare. This sector has long been a driver of the labor market, fueled by demand from middle-aged and older Americans.

Other sectors showed signs of weakness, especially professional and business services, which may indicate that the rise of AI is prompting many white-collar employers to reconsider their hiring and spending plans. Efforts by the Trump administration to reduce the size of the federal government have also weakened the federal workforce.

Meanwhile, ING analysts stated in a report that the previous employment data’s “significant” downward revision indicates that, aside from a few industries, “the economy has actually been losing jobs continuously.”

“This suggests that risks still favor the Fed cutting rates more than the two cuts we predicted,” they wrote.

Nevertheless, strong employment data is expected to support the central bank’s cautious stance on rate cuts, at least for now. Markets are beginning to price in a rate cut at the July meeting, later than the earlier expectation of a June cut. The Fed has already cut rates multiple times in 2025 to support a weakening job market.

3. Cisco’s Profit Margins Under Pressure

On the earnings front, networking equipment maker Cisco Systems reported quarterly gross margins below analyst expectations, causing its stock to fall more than 7% in after-hours trading.

The surge in spending on data centers needed for AI models has depleted much of the global memory chip supply, driving up prices for these processors. This has negatively impacted Cisco, whose routers and switches are typically driven by memory chips.

According to LSEG data cited by Reuters, Cisco’s adjusted gross margin for the second quarter was 67.5%, below the expected 68.14%.

Although CEO Chuck Robbins told investors during the post-earnings conference call that Cisco has raised prices and revised customer contracts, the company expects demand for its systems and optical equipment to remain strong, with AI-related orders projected to exceed $5 billion this fiscal year.

Additionally, Cisco’s competitors Arista Networks and semiconductor company Applied Materials will report earnings after the U.S. market closes.

4. Gold Declines

During Thursday’s European trading session, gold and silver prices declined as stronger-than-expected U.S. employment data dampened expectations of an imminent Fed rate cut, though safe-haven demand continued to limit the decline.

CME FedWatch shows the market currently prices a 92.5% chance that the Fed will hold rates steady in March, with a 79.1% probability of the same in April.

The employment report also triggered a rebound in the dollar overnight, putting pressure on metals markets.

Despite this, precious metals prices have retained most of their gains this week, supported by ongoing tensions between Iran and the U.S.

5. Oil Prices Slightly Rise

Oil prices hovered above the flatline as tensions between Washington and Tehran remain high, raising concerns over potential supply disruptions in this key oil-producing region.

Brent futures rose 0.2% to $69.56 per barrel, while U.S. WTI crude futures increased 0.3% to $64.81 per barrel.

On Wednesday, both benchmarks rose about 1%, as traders appeared to be factoring in higher risk premiums amid reports that Washington is considering dispatching a second aircraft carrier to the region.

Although Iran and the U.S. claimed some progress in weekend negotiations, no final agreement has been reached regarding Tehran’s nuclear activities, keeping markets tense.

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