U.S. futures slip as AI valuation worries return
U.S. stock futures edged lower on Wednesday, extending this week’s pullback in high-flying technology and AI shares as investors reassessed stretched market valuations. By early morning trading, Dow futures were down slightly, while the S&P 500 and Nasdaq also dipped, signaling a softer open after Tuesday’s sharp tech sell-off, when the Nasdaq posted its biggest daily drop in nearly a month.
The mood remains cautious after a powerful rally pushed major U.S. indices to record highs in late October. Analysts say the concern is simple: the AI trade has run incredibly far, and lofty valuations leave little room for disappointment. The S&P 500 is currently trading near 23 times forward earnings, well above its long-term average. As HSBC strategist Herald Van der Linde put it, when prices get this high, even a small negative headline can shake confidence, News.Az reports, citing Reuters.
Tech names once again led declines in pre-market trade. Advanced Micro Devices fell nearly 5%, Super Micro Computer tumbled around 9% after reporting results that failed to impress Wall Street, and other major chipmakers including Nvidia, Broadcom and Intel were also weaker. Investors are now watching for earnings reports from Qualcomm, Humana and McDonald's later in the day.
The backdrop is complicated by the longest U.S. government shutdown in history, which has clouded incoming data and sparked debate within the Federal Reserve over the next steps for monetary policy. Fresh labor-market clues are expected today, with economists predicting the ADP report will show a modest gain of around 28,000 jobs in October after losses in the previous month.
Trade policy is also back in focus. The Supreme Court will hear a case examining whether President Trump exceeded his authority when imposing tariffs under emergency powers. Meanwhile, China has paused some retaliatory tariffs following talks between the two countries’ leaders, though a 10% levy remains on many U.S. goods, and American soybeans continue to face a 13% tariff.
Elsewhere, shares of Eli Lilly rose before the bell as rival Novo Nordisk cut its outlook, while Pinterest sank more than 17% after forecasting weaker-than-expected fourth-quarter revenue. And in political news, Zohran Mamdani’s election as New York City’s mayor drew attention but generated little reaction from financial markets.
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