U.S. stock futures took a nosedive on Tuesday, with the Dow, S&P 500, and Nasdaq all experiencing significant drops. This downturn followed a warning from prominent Wall Street banks about a potential market correction, and the disappointing sales forecast from Palantir Technologies, a company that has seen a nearly 400% surge in stock price over the past year. The tech sector, a key driver of the bull market in U.S. equities, is facing scrutiny as doubts about its spending and monetization practices resurface.
The chief executives of Goldman Sachs and Morgan Stanley, speaking at an investment summit in Hong Kong, predicted a substantial market correction of over 10% in the next two years. This sentiment was echoed by David Morrison, a senior market analyst, who noted the market's overbought nature and the concentration of overvalued tech stocks. The tech sector's recent rally, fueled by artificial intelligence investments, is now under the microscope, with semiconductor companies Advanced Micro Devices and Qualcomm set to report earnings.
Adding to the market's uncertainty, the U.S. government shutdown has left Federal Reserve officials without critical data, making Wednesday's ADP National Employment data crucial for assessing the labor market. Conflicting views from Fed officials regarding December rate cuts and the current monetary policy further complicate matters. Meanwhile, Sarepta Therapeutics' stock took a hit after a trial for its muscle-wasting disease drug fell short of its goals, while Hims & Hers topped revenue estimates for the third quarter, causing their shares to rise.
The CBOE Volatility Index, a key indicator of market fear, reached a two-week high, suggesting heightened volatility. As the market navigates these challenges, investors are left to ponder the future of the tech sector and the broader U.S. stock market.
