Investing.com - U.S. stock futures pointed higher on Thursday, boosted by U.S. President Donald Trump's announcement that he had spoken with the leaders of Russia and Ukraine about ending their bloody multi-year conflict. The news helped to assuage some market jitters over a hotter-than-projected January inflation reading, along with a relatively sanguine reaction to the data from Federal Reserve Chair Jerome Powell. Elsewhere, Cisco Systems (NASDAQ:CSCO) shares soar in extended hours trading after the group lifts its full-year revenue guidance, as an artificial intelligence-driven spike in data center infrastructure investment underpins demand for the company's networking equipment.
1. Futures higher
U.S. stock futures edged higher on Thursday on renewed hopes for a potential peace deal to end the war in Ukraine, although faster-than-anticipated inflation data and subsequently fading bets over a potential interest rate cut this year tempered gains.
By 03:16 ET (08:16 GMT), the Dow futures contract had risen by 40 points or 0.1%, S&P 500 futures had inched up by 3 points or 0.1%, and Nasdaq 100 futures had advanced by 49 points or 0.2%.
The main averages rebounded from some early losses to finish in mixed fashion on Wednesday, as investors assessed the implications of a hot reading of January consumer price growth on Federal Reserve monetary policy.
Despite worries that the inflation number would all but quash the possibility that the Fed resumes a cycle of borrowing cost reductions in 2025, analysts noted that Fed Chair Jerome Powell's language in a Congressional testimony following the data indicated that the central bank's recent wait-and-see stance to further cuts had not significantly changed. Powell said that while progress had been made in cooling once red-hot prices, there is still more work to do.
Also bolstering sentiment were comments from White House economic advisor Kevin Hassett, who said that President Trump's sweeping reciprocal tariffs were a "work in progress." Analysts at Vital Knowledge said the remarks suggested that the levies were not a foregone conclusion and could be open to negotiation.
Still, a spokesperson for the White House noted that a formal announcement on the tariffs could come before Trump meets with Indian Prime Minister Narendra Modi on Thursday.
2. PPI ahead, CPI fallout
Markets will have a chance to parse through the latest monthly measure of U.S. producer prices on Thursday, which could provide further clarity around inflation in the world's largest economy.
Economists estimate that producer prices increased by 0.3% on a monthly basis in January, up from 0.2% in December. The core measure, stripping out food, energy and trade, is tipped to accelerate to 0.3% month-on-month.
Data on Wednesday showed that U.S. consumer prices rose by more than expected in January, pointing to lingering inflationary pressures that could bolster the case for the Fed to carefully approach future potential interest rate reductions.
Headline consumer prices increased by 3.0% in the twelve months to January, above expectations that the reading would match December's pace of 2.9%, according to Labor Department data. Month-on-month, the gauge unexpectedly accelerated to 0.5%, up from 0.4% in the prior month and faster than economists' expectations of 0.3%.
Markets reined in their expectations for Fed rate cuts this year in the wake of the data, with traders now anticipating 28 basis points worth of easing this year, roughly equivalent to only one reduction.
3. Trump on Ukraine peace
Trump has said that he has spoken with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy about ending the ongoing conflict in Ukraine, saying both men had expressed a desire to reach a peace deal in separate phone calls on Wednesday.
The Kremlin added that Trump and Putin had agreed to meet, while Trump said the two would "probably" speak face-to-face soon in Saudi Arabia.
Meanwhile, China has raised a proposal to hold a summit between Trump and Putin aimed at ending the war in Ukraine, which is now approaching its third anniversary, according to a report in the Wall Street Journal citing people familiar with the matter.
Major hurdles likely remain to be cleared before the hostilities can be halted. Russia currently occupies around 20% of Ukrainian territory and has demanded that Kyiv cede more areas. Ukraine wants Russia to withdraw from the captured territory and is pushing to receive NATO membership or similar security guarantees in a bid to prevent Moscow from attempting to carry out another attack in the future.
In a note to clients, analysts at Barclays (LON:BARC) said that "any progress towards a pause in the conflict may been seen as likely to ease the fiscal and economic burden" on European countries that have been grappling with elevated deficits and weaker economic growth since the outbreak of the war. A truce would subsequently support sentiment around equities in the region, they added.
4. Cisco, Reddit earnings
Shares in Cisco Systems surged in extended hours trading after the company lifted its annual revenue guidance thanks in large part to artificial intelligence-fueled demand for its cloud networking gear.
The group said it now expects its fiscal 2025 sales to be between $56 billion and $56.5 billion, versus previous a prior forecast of $55.3 billion to $56.3 billion. Analysts had anticipated an outlook of $55.99 billion, according to LSEG data cited by Reuters. Its forecast for third-quarter revenue also topped estimates.
Cisco has been a beneficiary of a surge in investment in data centers needed to power and train AI. Data centers use Cisco's products like routers and ethernet switches.
Elsewhere, Reddit shares plummeted in after-hours deadlmaking. The social media platform's daily active unique visitors in the fourth quarter missed expectations, due to changes in Google's search algorithm that impacted the number of users coming to the website, CEO Steve Huffman told shareholders in a letter.
Daily active unique visitors climbed by 39% to 101.7 million during the period, below projections of 103.3 million.
Thursday's slate of earnings will feature figures from Deere & Company (NYSE:DE) ahead of the market open on Wall Street, as well as returns from Applied Materials (NASDAQ:AMAT) and Palo Alto Networks (NASDAQ:PANW) after the closing bell.
5. Oil slips
Oil prices fell on expectations that a potential peace deal between Ukraine and Russia would end sanctions that have disrupted supply flows.
By 03:05 ET, the U.S. crude futures (WTI) slipped 1% to $70.66 a barrel, while the Brent contract fell 1% to $74.47 a barrel.
Both benchmarks fell more than 2% on Wednesday on raised hopes of a peace deal after President Trump spoke with the presidents of both Russia and Ukraine.
Russia is the world's third-largest oil producer and sanctions imposed on its crude exports as a result of its invasion of Ukraine nearly three years ago have supported higher prices.
A build in crude oil inventories in the United States, the world's biggest crude consumer, also weighed on the market.