Stock Index Futures Plunge on Valuation Concerns

December S&P 500 E-Mini futures (ESZ25) are down -1.01%, and December Nasdaq 100 E-Mini futures (NQZ25) are down -1.31% this morning as quarterly results from AI bellwether Palantir failed to impress investors and Wall Street executives cautioned about a potential correction due to sky-high valuations.

Palantir Technologies (PLTR) slumped over -7% in pre-market trading amid valuation concerns, despite the company reporting upbeat Q3 results and raising its full-year revenue guidance.

Morgan Stanley’s Ted Pick and Goldman Sachs’ David Solomon were among Wall Street executives at a Hong Kong summit who cautioned that markets might be facing a significant pullback, while noting that pullbacks are a normal part of market cycles. Also, Mike Gitlin, president and chief executive officer of Capital Group, which manages about $3 trillion in assets, said that corporate earnings remain strong but “what’s challenging are valuations.”

Also weighing on sentiment were mixed remarks from Federal Reserve officials. Chicago Fed President Austan Goolsbee said on Monday, “I’m not decided going into the December meeting. I am nervous about the inflation side of the ledger, where you’ve seen inflation above the target for four and a half years, and it’s trending the wrong way.” Also, Fed Governor Lisa Cook said she views the risk of further labor market weakness as outweighing the risk of rising inflation, though she refrained from explicitly supporting another rate cut next month. In addition, San Francisco Fed President Mary Daly said policymakers should “keep an open mind” about the possibility of a rate cut in December. By contrast, Fed Governor Stephen Miran said monetary policy remains restrictive and that he will continue to push for larger interest rate cuts. “The Fed is too restrictive, neutral is quite a ways below where current policy is,” Miran said.

Investors now await a fresh batch of corporate earnings reports.

In yesterday’s trading session, Wall Street’s main stock indexes ended mixed. IDEXX Laboratories (IDXX) surged over +14% and was the top percentage gainer on the S&P 500 and Nasdaq 100 after the veterinary medicine company posted upbeat Q3 results and raised its full-year guidance. Also, Amazon.com (AMZN) climbed +4% and was the top percentage gainer on the Dow after the tech giant’s cloud unit signed a $38 billion agreement to provide OpenAI with Nvidia GPUs. In addition, Kenvue (KVUE) jumped over +12% after Kimberly-Clark agreed to acquire the Tylenol maker for about $40 billion. On the bearish side, Charter Communications (CHTR) slid more than -4% and was the top percentage loser on the Nasdaq 100 after KeyBanc and Bernstein downgraded the stock.

Economic data released on Monday showed that the U.S. ISM manufacturing index unexpectedly fell to 48.7 in October, weaker than expectations of 49.4. At the same time, the U.S. October S&P Global manufacturing PMI was revised higher to 52.5, stronger than expectations of 52.2.

“With U.S. data softening and Fed officials keeping policy optionality alive, investors are reassessing positioning rather than chasing risk,” said Billy Leung, an investment strategist at Global X Management.

U.S. rate futures have priced in a 72.1% chance of a 25 basis point rate cut and a 27.9% chance of no rate change at the next FOMC meeting in December.

Third-quarter corporate earnings season rolls on, with investors awaiting fresh reports from high-profile companies today, including Advanced Micro Devices (AMD), Shopify (SHOP), Uber Technologies (UBER), Arista Networks (ANET), Amgen (AMGN), Pfizer (PFE), and Spotify (SPOT). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +7.2% increase in quarterly earnings for Q3 compared to the previous year, marking the smallest rise in two years.

Investors will also focus on a speech from Fed Vice Chair for Supervision Michelle Bowman.

Meanwhile, the U.S. government shutdown has entered its 35th day, with bipartisan negotiations reportedly gaining momentum and making progress. The government shutdown is set to become the longest in history, surpassing the 35-day shutdown that occurred during President Trump’s first term in 2018-2019. In light of the shutdown, the publication of September JOLTs job openings, factory orders, and trade data, originally set for today, will be delayed.

Goldman Sachs analysts said in a note that the current U.S. government shutdown appears poised to have the most significant economic impact of any shutdown on record. “Not only is it likely to run longer than the 35-day partial shutdown in 2018-2019, it is much broader than prior lengthy shutdowns, which affected only a few agencies,” the analysts said. They noted that a prolonged shutdown could more heavily impact federal spending and investment and might also spill over into private-sector activity.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.091%, down -0.39%.

The Euro Stoxx 50 Index is down -1.60% this morning, tracking a sell-off across global markets amid a broad shift away from riskier assets. Some disappointing corporate earnings reports added to the downbeat mood. Mining stocks led the declines on Tuesday. Meanwhile, U.K. Chancellor of the Exchequer Rachel Reeves indicated that further tax hikes might be necessary to achieve fiscal consolidation in this month’s budget, while emphasizing the need to curb inflation and keep borrowing in check. Investors await the Bank of England’s monetary policy decision later this week, with the central bank widely expected to leave its benchmark rate unchanged at 4.00%. In corporate news, Edenred (EDEN.P.DX) slumped over -8% after forecasting a slowdown in 2026 core profit growth. Also, Telefonica SA (TEF.E.DX) slid more than -10% after the telecom giant posted weaker-than-expected Q3 net profit and said it would halve its 2026 dividend. At the same time, Geberit AG (GEBN.Z.EB) rose over +1% after the Swiss plumbing materials maker boosted its full-year sales guidance.

The European economic data slate is mainly empty on Tuesday.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.41%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.74%.

China’s Shanghai Composite Index closed lower today as investors booked profits from this year’s top-performing sectors and rotated into defensive stocks amid a lull in corporate earnings and policy cues. Technology, healthcare, and non-ferrous metal stocks slumped on Tuesday. At the same time, bank stocks outperformed. UBS analysts said in a note that with limited corporate disclosures anticipated over the next 4-5 months, investors are rotating out of this year’s top performers, narrowing sector valuation gaps and prompting a return to more typical pricing. Lingering uncertainty over China’s domestic economic recovery also weighed on risk appetite. Meanwhile, China on Tuesday urged the U.S. to steer clear of four sensitive issues to ensure that last week’s thaw in relations between Presidents Donald Trump and Xi Jinping endures. China’s Ambassador to the U.S., Xie Feng, named Taiwan, democracy and human rights, China’s political system, and development rights as Beijing’s four red lines, emphasizing that “the most important thing is to respect each other’s core interests and major concerns.” Investors are awaiting China’s October trade data, scheduled for release later this week. Barclays economists said in a note that the high base effect and the Golden Week holiday likely hurt China’s exports in October. Still, the economists anticipate that the tactical truce reached between China and the U.S. at last week’s APEC summit will help ease short-term uncertainties surrounding exports.

Japan’s Nikkei 225 Stock Index closed sharply lower today as investors took profits following a recent rally. Technology stocks led the declines on Tuesday. The benchmark index was also pressured by steep declines in U.S. equity futures amid uncertainty surrounding the Fed’s policy outlook and warnings from Wall Street chief executives. A private-sector survey released on Tuesday showed that Japan’s manufacturing activity contracted in October at the quickest pace in 19 months, weighed down by weakening demand in the crucial automotive and semiconductor sectors. At the same time, the survey showed that input cost inflation accelerated to a four-month high, while output prices rose to a three-month high as firms moved to protect profit margins. The latest data showed that Japan’s consumer inflation has been picking up, keeping pressure on the Bank of Japan after it left interest rates unchanged last week. Meanwhile, Japanese Prime Minister Sanae Takaichi said on Tuesday that the country has not yet achieved the BOJ’s 2% inflation target in a sustainable manner supported by wage growth. In other news, Japan’s finance minister Satsuki Katayama issued a new warning over currency market volatility after the yen fell to its weakest level in nearly nine months. In corporate news, Sumitomo Electric climbed over +7% after the company raised its full-year net profit guidance. Investor attention now shifts to the BOJ’s minutes from its September meeting and a slew of Japanese economic data releases later this week for clues on the central bank’s policy path. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +15.73% to 32.66.

The Japanese October au Jibun Bank Manufacturing PMI arrived at 48.2, weaker than expectations of 48.3.

Pre-Market U.S. Stock Movers

The Magnificent Seven stocks fell in pre-market trading amid risk-off sentiment, with Tesla (TSLA) sliding over -2% and Nvidia (NVDA) dropping more than -1%.

Chip stocks retreated in pre-market trading, with Micron Technology (MU) falling over -3% and Advanced Micro Devices (AMD) dropping more than -2%.

Palantir Technologies (PLTR) slumped over -7% in pre-market trading amid valuation concerns, despite the company reporting upbeat Q3 results and raising its full-year revenue guidance.

Sarepta Therapeutics (SRPT) plummeted about -38% in pre-market trading after the biotechnology firm disclosed disappointing late-stage trial results for two gene therapies, AMONDYS 45 (casimersen) and VYONDYS 53 (golodirsen), targeting Duchenne muscular dystrophy.

Fabrinet (FN) climbed more than +5% in pre-market trading after the company posted better-than-expected FQ1 results and issued above-consensus FQ2 guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - November 4th

Advanced Micro Devices (AMD), Shopify (SHOP), Uber Technologies (UBER), Arista Networks (ANET), Amgen (AMGN), Eaton (ETN), Pfizer (PFE), Spotify Tech (SPOT), Itau Unibanco (ITUB), Marriott Int (MAR), Apollo Global Management (APO), Zoetis Inc (ZTS), Marathon Petroleum (MPC), Coupang LLC (CPNG), Axon Enterprise (AXON), Aflac (AFL), MPLX LP (MPLX), Exelon (EXC), AIG (AIG), Corteva (CTVA), Yum! Brands (YUM), Martin Marietta Materials (MLM), Live Nation Entertainment (LYV), Astera Labs (ALAB), Super Micro Computer (SMCI), Archer-Daniels-Midland (ADM), Kinross Gold (KGC), Eversource Energy (ES), Broadridge (BR), Fortis Inc (FTS), Pinterest (PINS), Toast (TOST), Waters (WAT), CDW Corp (CDW), Global Payments (GPN), Gartner (IT), Expeditors Washington (EXPD), Rivian Automotive (RIVN), IFF (IFF), Yum China Holdings (YUMC), UL Solutions (ULS), Tempus AI (TEM), Kratos Defense&Security (KTOS), Axa Equitable (EQH), Western Midstream Partners (WES), Lumentum Holdings Inc (LITE), Ball (BALL), Topbuild Corp (BLD), Skyworks (SWKS), Jack Henry&Associates (JKHY), American Financial (AFG), Assurant (AIZ), Essential Utilities (WTRG), Stanley Black Decker (SWK), Norwegian Cruise Line (NCLH), Exelixis (EXEL), Qiagen (QGEN), The AES (AES), Ovintiv (OVV), Madrigal Pharma (MDGL), Mosaic (MOS), Molson Coors Brewing B (TAP), Colliers International (CIGI), Match Group (MTCH), Masimo (MASI), Henry Schein (HSIC), Corcept (CORT), NNN REIT (NNN), Paylocity Holdng (PCTY), Advanced Energy (AEIS), Rhythm Pharma (RYTM), Ingredion (INGR), ADT (ADT), Voya Financial Inc (VOYA), Jackson Financial (JXN), Kyndryl Holdings (KD), PJT Partners Inc (PJT), Marathon Digital (MARA), IAMGold (IAG), GXO Logistics (GXO), Hamilton Lane (HLNE), CAVA Group (CAVA), Wingstop Inc (WING), Life Time Holdings (LTH), PTC Therapeutics (PTCT), Chord Energy (CHRD), Trex (TREX), Enpro Industries (NPO), Sealed Air (SEE), Novanta (NOVT), Sotera Health (SHC), Graphic Packaging (GPK), Mercury (MRCY), Upstart (UPST), Everus Construction (ECG), SSR Mining (SSRM), Radian (RDN), Macerich (MAC), Qualys (QLYS), Marzetti (MZTI), Zeta Global Holdings (ZETA), Kymera (KYMR), Silicon Labs (SLAB), Energy Fuels Inc (UUUU), California Resources (CRC), Hinge Health (HNGE).