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postTech led a sharp pullback in US stock futures on Tuesday as doubts about the AI-fueled rally crept in and investors waited for the next rush of quarterly earnings.
S&P 500 futures (ES=F) sank 1.3%, while those on the tech-heavy Nasdaq 100 (NQ=F) tumbled 1.6%. Contracts on the Dow Jones Industrial Average (YM=F), which includes fewer tech stocks, pulled back roughly 1%, or around 480 points.
Stock losses are accelerating as skepticism seeps in about the staying power of this year’s tech-driven rally, even as earnings come in strong. Despite a third quarter earnings beat, shares of Palantir (PLTR) dropped more than 5% as analysts suggested the AI-focused company’s valuation is overinflated.
The turnaround comes after AI-heavy tech names shone in a mixed session on Monday. Amazon notched a record close after striking a new partnership with OpenAI, helping the Nasdaq (^IXIC) advance nearly 0.5%. The S&P 500 (^GSPC) rose roughly 0.2%.
Looking ahead to the rest of earnings season, another 100-plus reports are due this week. Tuesday is highlighted by AMD (AMD), along with Uber (UBER), Spotify (SPOT) and SuperMicro (SMCI).
Investors are also keeping their eyes on potential developments in Washington, as the US government shutdown enters its 35th day to equal the record for the longest in history. The stoppage continues to delay the release of key economic data crucial to the Federal Reserve and Wall Street, including the jobs report slated for release this week.
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Norway wealth fund to vote against Musk’s $1 trillion Tesla pay package
Shares in Tesla (TSLA) slid in premarket as Norway’s sovereign wealth fund said it would oppose CEO Elon Musk’s proposed $1 trillion pay deal and as the EV maker’s sales in China faltered.
Norges Bank Investment Management’s plan to vote against a stock award to Musk is a setback for its backers at Tesla, given NBIM is the automaker’s ninth-biggest investor, per Bloomberg.
Reuters reported:
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Spotify rises after Q3 earnings tops estimates as margins rebound
Spotify (SPOT) stock rose 3% before the bell on Tuesday after the audio giant reported better-than-expected third quarter results, beating analyst estimates on revenue and margin, alongside user growth.
Yahoo Finance’s senior reporter Allie Canal reports on the latest earnings report from Spotify.
Read more here.
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ADM cuts 2025 profit outlook on weaker crush margins, shares tank
ADM (ADM) stock slumped 9% before the bell on Tuesday after it cutting its full-year 2025 profit outlook after weaker crush margins and delays in US biofuel policy weighed on results, sending the grain trader’s shares down nearly 9% in pre-market trading.
Reuters reports:
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Premarket trending tickers: Nvidia, MP Materials and Sarepta Therapeutics
Nvidia (NVDA) stock fell more than 1% in premarket trading on Tuesday. The fall in share price follows the news that Microsoft (MSFT) will provide the UAE with Nvidia chips for the first time.
MP Materials (MP) stock fell 3% in premarket trading after President Trump that the threat surrounding rare earths had “completely gone.”
Sarepta Therapeutics, Inc. (SRPT) stock slumped 39% before the bell on Tuesday after reporting a quarterly loss of $0.13 per share. This compares to earnings of $0.62 per share a year ago.
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Denny’s stock rockets up as breakfast chain agrees take-private deal
Shares of Denny’s shot up nearly 50% in premarket trading after the company said it has agreed to be bought by a group of investors that will take the casual dining chain private.
Reuters reports:
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Wall Street CEOs warn of a pullback from rich valuations
Bloomberg reports:
Wall Street chief executives said investors should brace for an equity market drop of more than 10% in the next 12 to 24 months, and that such a correction may be a positive development.
Corporate earnings are strong but “what’s challenging are valuations,” said Mike Gitlin, who helps oversee about $3 trillion as president and chief executive officer of investment manager Capital Group, during a financial summit organized by the Hong Kong Monetary Authority on Tuesday.
On whether stocks are cheap, fair or fully valued, Gitlin said most people “would say we’re somewhere between fair and full, but I don’t think a lot of people would say we’re between cheap and fair,” he said. The same goes for credit spreads, Gitlin added.
His views were echoed by Morgan Stanley CEO Ted Pick and Goldman Sachs Group Inc.’s David Solomon, who also see the possibility of a significant selloff in the coming period and said pullbacks are a normal feature of market cycles.
Read more here.
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Palantir stock drops after hours despite positive earnings report
Palantir (PLTR) stock dropped over 4% in extended trading after a heated rally despite beating third quarter expectations, as analysts argue the company is overvalued.
Read more here.
