UPDATE: Wall Street’s main indexes plunged to over one-week lows today, as significant warnings from major banks raise alarms about a potential market sell-off. Just announced by CEOs at Morgan Stanley and Goldman Sachs, equity markets may be facing a drawdown of 10% to 15%, amplifying concerns over inflated valuations.
In early trading on Tuesday, the Dow Jones Industrial Average fell 301.32 points or 0.64%, landing at 47,035.36. The S&P 500 lost 62.20 points or 0.90%, closing at 6,790.53, while the Nasdaq Composite dropped 291.37 points or 1.22%, settling at 23,543.35. This alarming downturn comes amid a broader trend of investor caution as the CBOE Volatility Index, Wall Street’s fear gauge, nears a two-week high.
Despite an optimistic forecast from AI darling Palantir Technologies, which projected fourth-quarter revenue above analysts’ estimates, its shares tumbled 8.7%. This drop is surprising, especially considering the stock has skyrocketed nearly 400% over the past year. Meanwhile, tech giants also suffered losses: Nvidia fell 2.1%, Alphabet slipped 1.6%, and Microsoft decreased 1.0%. The information technology sector was the biggest drag on the S&P 500, declining by 1.5%.
As market sentiments shift, Keith Buchanan, senior portfolio manager at Globalt Investments, remarked, “The market’s been moving higher as warranted from an earnings standpoint, but at some point…it seemed like it was kind of positioning for a risk-off pullback even on the slightest disappointment.” Investors are clearly reacting to these warnings, pulling back after a recent rally driven by AI investments.
Looking ahead, the market will be under scrutiny as Advanced Micro Devices and Super Micro Computer are set to report earnings after the bell today. With over 83% of S&P 500 companies reporting third-quarter results beating analyst expectations, compared to a long-term average of 67.2%, analysts are keen to see if this trend continues.
Additionally, the ongoing US government shutdown has reached record lengths, heightening the importance of private data for investors. All eyes will be on the upcoming ADP National Employment numbers due on Wednesday, which could further influence market dynamics.
Local elections, including New York’s mayor and governors of New Jersey and Virginia, will also be closely monitored for any potential impacts on economic and market sentiments.
Among individual stocks, Uber saw a sharp decline of 8.6% after missing quarterly operating profit expectations, while Henry Schein gained 13.4% after raising its annual profit forecast. In contrast, Spotify and US-listed shares of Shopify both reversed earlier gains, falling 3.5% and 3.1%, respectively, following their quarterly results.
Overall, the market is grappling with uncertainty, as declining issues outnumbered advancers by a 4.18-to-1 ratio on the NYSE and a 3.97-to-1 ratio on the Nasdaq, indicating heightened investor caution. The S&P 500 recorded five new 52-week highs and seven new lows, while the Nasdaq logged 16 new highs and an alarming 137 new lows.
Stay tuned for real-time updates as this story develops.
