Stock futures were dropping again Wednesday as investors worried that valuations have become too bloated off the back of a blistering artificial-intelligence rally. Some on Wall Street are now predicting a prolonged selloff.
Futures tracking the Dow Jones Industrial Average climbed 35 points, or 0.1%, but the blue-chip gauge looked likely to be the only index to open in the green. S&P 500 futures were down 0.2%, and contracts tied to the tech-heavy Nasdaq 100 slipped 0.3%.
The S&P 500 and Nasdaq both had their worst sessions in nearly a month on Tuesday, tumbling as a slew of negative headlines cascaded into a broader risk-off trade. Investors are questioning whether AI stocks still merit their lofty valuations, with Advanced Micro Devices looking like the latest name that will be punished. The chip maker’s shares fell 4.7% in late trading, despite an earnings beat.
“The market narrative saw a discernible shift, with a growing chorus discussing whether we might be on the verge of an equity correction,” Deutsche Bank macro strategist Jim Reid said. “That speculation has gathered pace over the last month in particular, mainly because the Magnificent 7 has diverged from the rest of the S&P 500, which has revived questions about how concentrated this equity market now is.”
Wall Street will also be keeping an eye on political developments on Wednesday, with Democrat Zohran Mamdani winning New York City’s mayoral race and the ongoing government shutdown becoming the longest in U.S. history.
The yield on the 10-year U.S. Treasury note slipped 1 basis point to 4.08%. The dollar was down 0.1% against a weighted basket of its peers. Gold jumped 0.9% to $3,995 an ounce as investors sought out safe havens.