The chief executives of Goldman Sachs and Morgan Stanley warned in an investment summit in Hong Kong of a stock market correction of more than 10% over the next two years.
Palantir Technologies’ shares slid 6.6% in premarket trading even as the data analytics company forecast fourth-quarter (Q4) revenue above analysts’ estimates. The stock has jumped nearly 400% in the past year.
Wall Street indexes touched all-time highs last week and marked solid gains for October as quarterly reports from several Big Tech companies signaled surging investments in artificial intelligence, a key driver of the bull run in US equities this year.
However, doubts surrounding the circular nature of the spending and monetisation of the technology have resurfaced, spurring investors to pull back after a breakneck rally in AI-related stocks.
“It just feels like there’s been so much talk that the market is overbought and there’s a lot of overvalued stuff there that’s concentrated in tech,” said David Morrison, senior market analyst at Trade Nation.
The rally will be under renewed scrutiny with semiconductor company Advanced Micro Devices reporting after the bell today and Qualcomm later in the week.
Big names reporting before the bell include Uber, Pfizer, Marriott International, Yum Brands and Shopify.
At 6.01am, Dow E-minis fell 337 points, or 0.71%, S&P 500 E-minis shed 68.25 points, or 0.99%, and Nasdaq 100 E-minis lost 336.25 points, or 1.29%.
The CBOE Volatility Index, Wall Street’s fear gauge, was near a two-week high.
Data darkness dimming December hopes
With the US government shutdown likely to become the longest ever, Federal Reserve (Fed) officials have been left in the dark without data to rely on.
Wednesday’s ADP National Employment data will take on renewed importance as a gauge of the labour market.
Recent conflicting commentary from Fed officials has indicated differing perspectives on how to handle the data gap.
Chicago Fed president Austan Goolsbee said he was on the fence about cutting rates in December, with inflation still far above the central bank’s target, while governor Stephen Miran called the current monetary policy too restrictive.
Traders are now pricing in a 70% chance of a 25-basis-point rate cut in December, lower than 90% a week earlier, according to CME Group’s FedWatch tool.
Sarepta Therapeutics shares dropped 40% in premarket trading after a trial for its muscle-wasting disease drug missed a key goal.
Hims and Hers topped revenue estimates for the third-quarter, sending shares rising 0.7%.