Oct 10 (Reuters) - U.S. stock index futures were muted on Friday, extending a pause after a blistering rally, while investors awaited consumer sentiment data due later in the day for fresh insights into the economy.
The earnings season that begins next week will be a crucial litmus test for U.S. stock markets, but traders so far have brushed off concerns about a bubble in equities.
Some analysts expect the AI trade, mostly concentrated in tech so far, to 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 Francis Gannon, co-chief investment officer at Royce Investment Partners.
Also adding to the rally 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. While the government shutdown has delayed official releases, proxies point to a weakening labor market, with layoffs tied to the impasse likely to deepen the strain.
At 06:55 a.m. ET, Dow E-minis were up 41 points, or 0.09%, S&P 500 E-minis were up 0.5 point, or 0.01%, and Nasdaq 100 E-minis were up 1.5 points, or 0.01%.
A preliminary reading of the University of Michigan's consumer sentiment survey, 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 (INTC.O), rose 1.9% in premarket trading, after TD Cowen raised its price target on the stock. Data center operator Applied Digital (APLD.O), surged 22.1%, a day after posting better-than-expected revenue for the first quarter.
Levi Strauss (LEVI.N), shares slipped 6.6% after it forecast annual profit below analysts' expectations.
Qualcomm (QCOM.O), fell 2.6% after China's market regulator said the country has launched an antitrust investigation into the semiconductor manufacturer over its acquisition of Israel's Autotalks.
Reporting by Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Anil D'Silva and Shilpi Majumdar
