(Reuters) -U.S. stock index futures edged higher on Friday, signaling a rebound after a brief pause as investors refocused on AI-driven momentum that has steered markets this year, while awaiting consumer sentiment data for fresh clues on the economy.
While the earnings season that begins next week will be a crucial litmus test for U.S. stock markets, traders so far have brushed off concerns about a bubble in equities.
Some analysts believe the AI trade, so far mostly concentrated in tech, will spill
over into energy and construction firms as demand for data center buildout accelerates.
"I feel pretty confident that AI will broaden out to other areas of the market. Investors are going to realize that the companies that provide or create AI are one thing, but companies that will be the beneficiaries are equally, if not more, important," said Franics Gannon, co-chief investment officer at Royce Investment Partners.
Also adding to the run is the fear of missing out, as some analysts say the nearly three-year-old bull market still has room to run, especially if the Federal Reserve continues to lower interest rates.
Recent data has reinforced expectations for easing. The government shutdown has delayed official releases but proxies point to a weakening labor market, with layoffs tied to the impasse likely to deepen the strain.
At 05:20 a.m. ET, Dow e-minis were up 37 points, or 0.08%, U.S. S&P 500 E-minis rose 3.5 points, or 0.05% and Nasdaq 100 E-minis inched up 16.5 points, or 0.07%.
A preliminary reading of the University of Michigan's consumer sentiment survey, which is due at 10:00 a.m. ET, will be in focus. It could carry extra weight because of the official data blackout.
Investors are also weighing developments in the Middle East, where Israeli troops began pulling back from some parts of Gaza on Friday under a ceasefire deal with Hamas. Signs of easing tensions could lift sentiment by removing a long-standing overhang on equities.
Among stocks, Intel rose 1.7% premarket after TD Cowen raised its price target on the stock, while data center operator Applied Digital surged 24.3% a day after posting better than expected revenue for the first quarter.
Levi Strauss shares slipped 7.2% after its annual profit forecast fell short of expectations.
(Reporting by Niket Nishant in Bengaluru; Editing by Anil D'Silva)
