Nasdaq, S&P 500 Futures Subdued As Investors Eye Inflation Data: Analyst Warns AI Bubble Peaking As Bull Run Takes Market To Record High

U.S. stock futures treaded water early Thursday as traders looked ahead to the August consumer price inflation (CPI) report for confirmation on the thaw in pricing pressure relayed by its wholesale counterpart.

Given that the S&P 500 Index has reclaimed its record high, the overbought levels could temper any optimism stemming from a benign retail price inflation number. Deutsche Bank and Barclays became the latest firms to revisit their year-end S&P 500 price targets. While the former lifted its forecast to 7,000 from 6,550, the latter raised it to 6,450 from 6,050. Incidentally.

The premises behind the moves are strong corporate earnings, artificial intelligence (AI) optimism and the economy’s resilience.

As of 3:05 a.m. ET on Wednesday, the Nasdaq 100, S&P 500 futures, Dow and Russell 2000 futures were all modestly higher.

On Wednesday, a strong surge in Oracle (ORCL) shares and its ripple effect on other AI stocks, and a tame producer price inflation report inspired positive closes by the S&P 500 Index and the Nasdaq Composite Index. The upward move, although less convincing, helped these indices to close in uncharted territory.

On the other hand, the 30-stock Dow Jones Industrial Average ended in the red.

The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) gained 0.06% and 0.08%, respectively. On the other hand, the SPDR Dow Jones Industrial Average ETF Trust (DIA) and the Shares Russell 2000 ETF (IWM) retreated 0.45% and 0.18%, respectively..

Among the key economic data due for Thursday are:

• Bureau of Labor Statistics’ August CPI report (8:30 a.m. ET)
• Initial jobless claims (8:30 a.m. ET)
• Monthly federal budget for August (2 p.m. ET)

Economists, on average, expect the CPI index to rise 0.3% month-over-month, faster than July’s 0.2% rise. On a year-over-year basis, the index may have increased at an accelerated pace of 2.9% compared to July’s 2.7% rate. The monthly and annual rates of the core CPI, which excludes food and energy, are expected to remain unchanged at 0.3% and 3.1%.

Among the earnings scheduled for the day are Kroger (KR), Lovesac (LOVE), Adobe, Inc. (ADBE) and RH (RH).

Not all are convinced about the health of the rally. Former JPMorgan Chief Strategist Marko Kolanoic warned of an AI bubble. In a post on X following Oracle’s staggering rally, he said, “NDX basically flat despite NVDA 5% AVGO 10% and  $ORCL 40% up. Peak AI bubble. By the end of the month, I think all gains in these could evaporate.”

Crude oil futures slipped early Thursday ahead of the inflation data, and gold futures edged down after closing nearly flat on Wednesday. The U.S. dollar was firmer across the board.

The 10-year U.S. benchmark Treasury note yield is in a consolidation phase just above 4% amid the strengthening case of rate cuts when the Federal Reserve’s monetary policy-setting arm meets next week.

The Asian markets were mixed on Thursday, with the buoyancy of U.S. tech stocks aiding the Japanese, Chinese, Taiwanese, and South Korean markets. The rest of the major markets in the region retreated. 

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