AI dip buyers return, lifting US futures; bond market concerns persist

Following yesterday's unfavorable US inflation figures and a further tech sell-off, dip buyers are once again lining up to re-enter the market today.

S&P 500 futures have risen 0.7%, while Nasdaq futures are up 1.5%. A recovery in technology shares is helping to lift sentiment ahead of the market's opening.

Much of the optimism is being attributed to CoreWeave, somewhat surprisingly.

The AI cloud provider had been at the center of growing concerns about an AI bubble over the past month, but those worries have been set aside for now. The company posted a 168% increase in quarterly revenue, and its shares have climbed as much as 14% in pre-market trading, offering relief after a 40% decline since the start of October.

More importantly, its $132.5 billion revenue backlog indicates that demand for AI computing capacity remains robust. Management also sees a path to adjusted profitability in the first half of 2028, though that is still some way off.

Nvidia shares are also stabilizing after two days of steep losses that erased roughly $430 billion from the company's market value. The unresolved controversy over CEO Jensen Huang's reported relationship with a suspected Chinese spy has not deterred bargain hunters, who seem willing to overlook the uncertainty for now. Nvidia shares are up about 3% in pre-market trading.

Additionally, Anthropic is reportedly moving ahead with its IPO plans, targeting a valuation of up to $1.4 trillion. Taken together, these factors are generating renewed excitement in the AI sector.

Nevertheless, caution is advised regarding the sustainability of this rebound.

The recovery is occurring without the US bond market, which is closed for the Veterans Day holiday. After yesterday's hotter inflation report, 2-year Treasury yields surged toward 4.74% and 10-year yields moved back toward 5%, so the underlying threat remains.

Higher borrowing costs are particularly uncomfortable for heavily indebted AI infrastructure firms, and rising yields also make it harder to justify expensive growth-stock valuations.

If the bond market sell-off continues and yields keep rising, it could dampen today's recovery. More clarity will come tomorrow when fixed-income traders return.

Equities may be enjoying a gain today, but if yields resume their climb when the bond market reopens tomorrow, the tech rebound could face a rude awakening in the second half of the week.