Steep Drop By Palantir May Weigh On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a sharply lower open on Tuesday, with stocks likely to come under pressure following the mixed performance seen in the previous session.

A steep drop by shares of Palantir Technologies (PLTR) is likely to weigh on Wall Street, as the software company is plunging by 8.2 percent in pre-market trading.

The slump by Palantir comes amid concerns about the stock's valuation even though the company reported better than expected fiscal fourth quarter results and raised its revenue guidance.

"It speaks to just how supercharged Palantir's share price has been in 2025 that even a set of numbers as impressive as those it produced for its third quarter were insufficient to sustain the momentum," said Dan Coatsworth, head of markets at AJ Bell.

He added, "Even in the context of the booming AI sector, the company's valuation has reached high levels as investors have seized on its perceived close links with the Trump administration and AI-driven revenue growth."

Ride-hailing and food-delivery company Uber Technologies (UBER) is also seeing significant pre-market weakness despite reporting third quarter revenues that exceeded analyst estimates.

On the other hand, shares of Spotify Technology (SPOT) are likely to see initial strength after the music streaming platform reported better than expected third quarter revenues.

The downward momentum on Wall Street also comes as Goldman Sachs (GS) CEO David Solomon warned of a significant correction by the equity markets over the next 1-2 years.

"It's likely there'll be a 10 to 20 percent drawdown in equity markets sometime in the next 12 to 24 months," Solomon said at the Global Financial Leaders' Investment Summit in Hong Kong. "Things run, and then they pull back so people can reassess."

After ending last Friday's session in positive territory, the major U.S. stock indexes turned in a mixed performance during trading on Monday. While the Nasdaq and the S&P 500 saw further upside, the narrower Dow moved to the downside.

The Dow fell by 226.19 points or 0.5 percent to 47,336.68, but the S&P 500 rose 11.77 points or 0.2 percent to 6,851.97 and the Nasdaq climbed 109.77 points or 0.5 percent to 23,834.72.

The gain by the tech-heavy Nasdaq partly reflected a sharp increase by shares of Amazon (AMZN), with the online retail giant surging by 4.0 percent to a record closing high

Amazon extended last Friday's rally after announcing a $38 billion agreement with OpenAI that provides Amazon Web Services' world-class infrastructure to run and scale OpenAI's core artificial intelligence workloads.

AI darling and market leader Nvidia (NVDA) also jumped by 2.2 percent after software giant Microsoft (MSFT) revealed it has secured export licenses from the Trump administration to ship Nvidia chips to the United Arab Emirates.

Meanwhile, a 4.1 percent plunge by shares of Merck (MRK) weighed on the Dow along with notable declines by Nike (NKE), 3M (MMM) and Chevron (CVX).

Traders may have been reluctant to make more significant moves ahead of the release of payroll processor ADP's report on private sector employment on Wednesday.

With the ongoing government shutdown indefinitely delaying several key U.S. economic reports, the ADP report could shed light on the strength of the labor market amid uncertainty about the outlook for interest rates.

In U.S. economic news, the Institute for Supply Management released a report showing manufacturing activity unexpectedly contracted at a slightly faster rate in the month of October.

The ISM said its manufacturing PMI slipped to 48.7 in October after edging up to 49.1 in September, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.5.

Oil service stocks turned in a strong performance amid a modest increase by the price of crude oil, with the Philadelphia Oil Service Index jumping by 2.2 percent.

Considerable strength was also visible among retail stocks amid the surge by Amazon, driving the Dow Jones U.S. Retail Index up by 1.7 percent.

Computer hardware stocks also saw significant strength on the day, while housing stocks showed a notable move to the downside.

Commodity, Currency Markets

Crude oil futures are slumping $0.86 to $60.19 a barrel after inching up $0.07 to $61.05 a barrel on Monday. Meanwhile, after climbing $17.50 to $4,014 an ounce in the previous session, gold futures are falling $18.80 to $3,995.20 an ounce.

On the currency front, the U.S. dollar is trading at 153.37 yen compared to the 154.21 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1493 compared to yesterday's $1.1518.

Asia

Asian stocks ended mostly lower on Tuesday as the tech rally fizzled out due to valuation concerns and investors weighed mixed messages from Federal Reserve officials over the path of interest rates.

As the U.S. government shutdown entered its sixth week, a survey showed the U.S. industrial sector remains under pressure from weak growth and tariff-related uncertainty.

China's Shanghai Composite Index dropped 0.4 percent to 3,960.19 due to uncertainty around the domestic economic recovery. Hong Kong's Hang Seng Index fell 0.8 percent to 25,952.40.

China's ambassador to the United States Xie Feng today urged Washington to avoid crossing Beijing's "red lines" so a trade truce sealed between Presidents Donald Trump and Xi Jinping can hold.

He named Taiwan, democracy and human rights, China's political system, and development rights as Beijing's four red lines, adding, "The most important thing is to respect each other's core interests and major concerns."

Japanese markets tumbled as tech stocks succumbed to profit taking and a survey showed Japanese manufacturing activity shrank at the fastest pace in 19 months in October.

The Nikkei 225 Index slumped .7 percent to 51,497.20 as traders returned to their desks after a long holiday weekend. The broader Topix Index closed 0.7 percent lower at 3,310.14.

Technology investor SoftBank Group plunged 7 percent and chip-testing equipment maker Advantest plummeted 5.9 percent.

Tokyo Electron added 1.8 percent after hiking its operating profit forecast by 2.8 percent for the year ending March 2026.

Seoul stocks plunged to snap a four-day winning streak amid a massive foreign sell-off. Investors also digested government data that showed South Korean consumer prices rose at the fastest pace in more than a year in October.

The Kospi dove 2.4 percent to close at 4,121.74 after the recent surge driven by expectations surrounding the Asia-Pacific Economic Cooperation (APEC) gathering last week.

Samsung Electronics plunged 5.6 percent and SK Hynix nosedived 5.5 percent on profit taking after surging to record highs Monday.

Australian markets ended sharply lower to hit over one-month lows as the Reserve Bank of Australia left the cash rate unchanged at 3.60 percent in a widely expected decision and warned of persistent inflationary pressures.

The benchmark S&P/ASX 200 Index slid 0.9 percent to 8,813.70, while the broader All Ordinaries index ended down 0.9 percent at 9,098.20. Lower iron ore prices weighed on the mining sector, with BHP Billiton falling 1.9 percent and Rio Tinto losing 2.6 percent.

Novonix shares fell more than 10 percent to hit a one-month low after a unit of Stellantis terminated its offtake agreement with the battery materials producer.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index rose 0.4 percent to 13,605.96, extending gains for an eighth consecutive session to close at a record high.

Europe

European stocks have moved notably lower on Tuesday as mixed earnings, weak U.S. manufacturing data and cautious comments from Federal Reserve officials over the path of interest rates has soured investors' appetite for riskier assets.

The U.K.'s FTSE 100 Index is down by 0.4 percent, the French CAC 40 Index is down by 1.0 percent and the German DAX Index is down by 1.2 percent.

Telefonica has plummeted. The Spanish telecoms giant said it would halve its 2026 dividend as part of a new strategic plan.

Fresenius Medical Care has also slumped. The German dialysis specialist maintained its 2025 targets after reporting better-than-expected third-quarter results, helped by cost cuts.

Edenred shares have also plunged. The French vouchers and benefit cards provider lowered its medium-term earnings growth targets.

Skanska has also fallen after an announcement that the Swedish builder will invest approximately SEK 820 million in the fifth phase of the Nowy Rynek office complex in Poznan, Poland.

On the other hand, Swiss plumbing materials maker Geberit has moved to the upside after raising its 2025 sales forecast.

Dutch medical technology company Philips has also advanced. The company raised the upper end of its full-year margin forecast after reporting third-quarter revenue in line with analysts' expectations.

U.S. Economic News

Due to the ongoing government shutdown, no major U.S. economic data will be released today.