U.S. Stocks May See Further Downside Amid Lingering Valuation Concerns

(RTTNews) - Following the sharp pullback seen in the previous session, stocks may see further downside in early trading on Friday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.4 percent.

Concerns about valuations may continue to weigh on Wall Street, as investors have recently expressed worries about an artificial intelligence bubble.

Valuation anxiety triggered a sell-off on Tuesday, with shares of Palantir Technologies (PLTR) plunging even though the software company reported better than expected fiscal fourth quarter results and raised its revenue guidance.

Goldman Sachs (GS) CEO David Solomon and Morgan Stanley (MS) CEO Ted Pick also warned of a significant correction by the markets over the next one to two years.

After a rebound on Wednesday, the valuation concerns resurfaced on Thursday despite a lack of major catalysts, leading to considerable weakness amid AI players like Nvidia (NVDA) and Oracle (ORCL).

However, investors such as Louis Navellier, founder and chief investment officer at Navellier & Associates, have noted corrections are not out of the ordinary in light of the strength in the markets over the past year.

"Corrections with these levels of gains are normal and to be expected, not something to panic over," Navellier said in a report to investors.

Navellier also said there's "still hope for a year-end rally once the government shutdown ends and the tariff situation is resolved," noting Nvidia's important quarterly earnings report is still nearly two weeks away.

Not long after the start of trading, the University of Michigan is scheduled to release it preliminary reading on consumer sentiment in the month of November. The consumer sentiment index is expected to edge down to 53.2 in November after falling to 53.6 in October.

After coming under pressure early in the session, stocks saw continued weakness throughout much of the trading day on Thursday. The major averages more than offset the gains posted during Wednesday's session, falling to their lowest closing levels in two weeks.

The major averages moved to the downside going into close, ending the day just off their lows of the session. The Nasdaq tumbled 445.80 points or 1.9 percent to 23,053.99, the S&P 500 slumped 75.97 points or 1.1 percent to 6,720.32 and the Dow slid 398.70 points or 0.8 percent to 46,912.30.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index dove by 1.2 percent, while Hong Kong's Hang Seng Index fell by 0.9 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index is down by 1.0 percent, the U.K.'s FTSE 100 Index is down by 0.7 percent and the French CAC 40 Index is down by 0.5 percent.

In commodities trading, crude oil futures are climbing $0.50 to $59.93 a barrel after slipping $0.17 to $59.43 a barrel on Thursday. Meanwhile, after edging down $1.90 to $3,991 an ounce in the previous session, gold futures are rising $14.80 to $4,005.80 an ounce.

On the currency front, the U.S. dollar is trading at 153.22 yen versus the 153.06 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1564 compared to yesterday's $1.533.