Stock market today: Dow, S&P 500, Nasdaq futures climb as high-stakes Trump-Xi summit kicks off

Yahoo Finance’s Ines Ferre reports:

Cisco (CSCO) stock jumped more than 15% in premarket trading on Thursday after the networking giant issued a stronger-than-expected revenue outlook and cut thousands of jobs as it sharpens its focus on artificial intelligence.

Cisco’s fiscal fourth quarter revenue outlook of $16.7 billion to $16.9 billion came in well above Wall Street expectations of roughly $15.8 billion.

CEO Chuck Robbins said the workforce reductions are part of a broader effort to position Cisco for the AI era. The layoffs are expected to impact fewer than 4,000 employees, or under 5% of the company’s workforce.

Read more here.

Stocks are hitting records as earnings surge. Meanwhile, bonds are competing harder for investor cash, Yahoo Finance’s Jared Blikre writes in today’s Chart of the Day.

He writes:
The S&P 500 (^GSPC) is in the middle of one of its strongest earnings seasons in decades, with profit growth accelerating, beat rates running hot, and analysts lifting future estimates instead of cutting them.

Profits are strong enough to justify the record highs that stocks keep hitting.

But the bond market is making that climb harder.

The chart below shows the S&P 500’s realized earnings yield minus the 10-year Treasury yield (^TNX), a version of a bond-stock valuation gauge recently highlighted by the Kobeissi Letter.

… Right now, the S&P 500’s realized earnings yield is roughly 3.4%, below the 10-year Treasury yield near 4.5%. That leaves the gap at roughly negative 110 basis points — or 1.1 percentage points — the widest negative reading since 2003.

Read more here about what that could mean.

From Bloomberg:

Xi Jinping signaled China is moving toward greater openness, striking an upbeat note during his meeting with US business leaders accompanying Donald Trump as the two presidents wrapped up morning talks that featured more divisive issues like trade and Taiwan.

“American enterprises are deeply involved in China’s reform and opening up, a process from which both sides have benefited,” Xi told more than 10 business representatives gathered at the Great Hall of the People in Beijing, China Central Television reported. “China’s door to the outside world will only open wider.”

Footage released by the state broadcaster showed executives including Tesla Inc.’s (TSLA) Elon Musk, Apple Inc.’s (AAPL) Tim Cook, Boeing Co.’s (BA) Kelly Ortberg and Nvidia Corp.’s (NVDA) Jensen Huang — who joined the trip as a last-minute addition — escorted by staff into the meeting room.

The message sent by Xi reiterated a pledge frequently delivered by senior Chinese officials on the world stage over the years. It also appeared to be a response to Trump’s appeal to Xi “to ‘open up’ China,” which he’d promised to make as his first request on behalf of the business leaders accompanying him to Beijing.

In his remarks on Thursday, Xi added that he believes US firms will have even broader prospects in China, CCTV reported.

Read more here.

Bloomberg reports:

Oil steadied ahead of a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping, which is being held against the backdrop of the Iran war that shows no signs of a near-term resolution.

West Texas Intermediate (CL=F) traded near $101 a barrel after declining 1.1% in the previous session. Brent (BZ=F) crude closed below $106. Trump is scheduled to meet Xi on Thursday, and the US leader told reporters this week that trade talks will be prioritized rather than discussions about the Middle East conflict.

The war has led to global oil inventories shrinking at a record pace, and the market will remain “severely undersupplied” until October even if the conflict ends next month, according to the International Energy Agency. Ahead of the Trump-Xi summit, the US threatened banks and sanctioned more entities over the sale of Iranian oil to China, the biggest buyer of its crude.

The flow of crude and fuels through the crucial Strait of Hormuz fell by nearly 6 million barrels per day in the first quarter, following the start of hostilities at the end of February, according to the Energy Information Administration. Only a trickle of tankers have been able to exit the Persian Gulf during the war.

Read more here.