US stock futures rise as AI stocks catch their breath; midterms in focus

The tech-heavy Nasdaq-100 shed over $2.5 trillion in market value last month and was on the brink of entering correction territory, as investors grew wary of Big Tech's soaring AI spending while awaiting evidence of stronger returns.

Several companies have also tapped the bond market to finance those investments recently, amplifying concerns that debt-funded spending will become harder to justify as borrowing costs rise.

Sentiment towards the AI trade was mostly negative last week. Media reports on Friday stated that OpenAI has slashed the target for its latest funding round by $10 billion. A separate report stated that Blackstone told investors that Anthropic may not secure an investment-grade rating after its IPO.

At 7:01 a.m. ET, Dow E-minis were up 256 points, or 0.49%, and S&P 500 E-minis were up 35 points, or 0.46%. Nasdaq 100 E-minis were up 212.5 points, or 0.74%.

The mood improved on Monday, with most megacap and growth stocks rising in premarket trading. SpaceX and Alphabet were among the top gainers.

Intel extended losses, down about 1%, after clocking its worst one-day fall since the 1980s on Friday. The chipmaker forecast quarterly revenue below market estimates and said it does not expect positive cash flow this year.

Rival AMD is set to report its earnings later this week, while tech giant Apple eased 0.4% ahead of its quarterly earnings due after the bell.

"It is likely to remain volatile through the earnings season, and individual companies may get punished by the market if they're not fulfilling the market's asks on all of those fronts," said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.

Risk sentiment also got a lift from oil prices falling more than 4% as talks between Iranian and Qatari officials on a deal to end the US-Israeli war on Iran raised hopes that Middle East supply disruptions could ease.

This week's key catalysts include the US midterm elections on Tuesday, which will determine whether Democrats can wrest control of Congress away from President Donald Trump's Republican Party.

Democrats are widely predicted to win the House of Representatives, but the Senate is more in doubt. Republicans controlled both chambers of Congress during the first two years of the Trump administration.

"Midterm elections tend to be unfavourable events for the party in power and a Democratic victory in the House of Representatives would return the US to divided government, which would hardly be unusual," said Seth Meyer, global head of client portfolio management at Janus Henderson Investors.

Among other early-moving stocks, Estee Lauder gained 2.6% after the beauty products maker raised its annual sales and profit forecasts, while Okta rose 2.7% as S&P Dow Jones Indices said the identity management firm was to join the S&P 500, replacing Kenvue.