Valuation Concerns May Continue To Weigh On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to see further downside following the sharp pullback seen in the previous session.

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.

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.

The sharp pullback on Wall Street came amid renewed weakness among artificial intelligence-related stocks, which led the sell-off seen on Tuesday.

Shares of Advanced Micro Devices (AMD) plunged by 7.3 percent after showing a strong move to the upside over the course of the previous session. Major AI players Palantir Technologies, Oracle and Nvidia also showed significant moves to the downside.

Chipmaker Qualcomm (QCOM) also tumbled by 3.6 percent despite reporting better than expected fiscal fourth quarter results and providing upbeat guidance for the current quarter.

Concerns about an AI bubble and the possibility of a near-term correction have recently weighed on investors' minds.

Negative sentiment may also have been generated in reaction to a report from global outplacement firm Challenger, Gray & Christmas showing a sharp increase in layoff announcements in the month of October.

Challenger, Gray & Christmas said U.S.-based employers announced 153,074 job cuts in October, up 183 percent from the 54,064 job cuts announced in September and up 175 percent from the 55,597 cuts announced in the same month a year ago.

"Some industries are correcting after the hiring boom of the pandemic, but this comes as AI adoption, softening consumer and corporate spending, and rising costs drive belt-tightening and hiring freezes," said Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas.

He added, "Those laid off now are finding it harder to quickly secure new roles, which could further loosen the labor market."

Challenger, Gray & Christmas said employers have announced 1,099,500 job cuts through the first ten months of the year, marking the highest level of year-to-date job cuts since 2020.

Semiconductor stocks showed a substantial move back to the downside following Wednesday's rebound, with the Philadelphia Semiconductor Index tumbling by 2.4 percent.

Significant weakness was also visible among software stocks, as reflected by the 2.2 percent slump by the Dow Jones U.S. Software Index.

Retail, airline and computer hardware stocks also saw considerable weakness, while energy stocks bucked the downtrend despite a modest decrease by the price of crude oil.

Commodity, Currency Markets

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.

Asia

Asian stocks declined on Friday as U.S. job data signaled weakness in the country's labor market and customs data showed Chinese exports unexpectedly fell in October after months of frontloading U.S. orders to beat President Donald Trump's tariffs.

Traders also weighed cautious comments from Federal Reserve officials expressing hesitation about continuing with further interest rate cuts.

China's Shanghai Composite Index ended down 0.3 percent at 3,997.56 amid mixed catalysts.

Media reports suggested that the U.S. is pushing forward on Trump's pledge to pause a series of penalties aimed at China's shipbuilding industry.

Separate reports said the White House has informed other federal agencies that it will not permit Nvidia to sell its latest scaled-down AI chips to China.

Markets showed little reaction to official data that showed Chinese exports contracted in October, hit by a 25 percent drop in shipments to the United States.

Data showed exports fell 1.1 percent year-on-year last month, marking the first drop in shipments since February following an 8.3 percent increase in September. Imports rose 1 percent last month from the year before, compared with 7.4 percent growth in September.

Hong Kong's Hang Seng Index fell 0.9 percent to 26,241.83 on concerns about stretched tech valuations.

Japanese markets retreated as heavyweight tech stocks tracked an overnight decline on Wall Street. The Nikkei 225 Index slumped 1.2 percent to 50,276.37, taking its weekly loss to 4.1 percent - the biggest weekly drop since April. The broader Topix Index settled 0.4 percent lower at 3,298.85.

Tech stocks like SoftBank and Advantest lost 6-7 percent, while Recruit Holdings soared 16.1 percent and Nissan Motor surged 4.3 percent after reporting their financial results.

Seoul stocks moved sharply lower, with the Kospi tumbling 1.8 percent to 3,953.76 on valuation worries. Samsung Electronics, SK Hynix and Hyundai Motor dropped 1-2 percent.

Australian markets ended at a six-week low, with financials and miners leading losses. The benchmark S&P/ASX 200 Index slid 0.7 percent to 8,769.70, while the broader All Ordinaries Index ended down 0.7 percent at 9,031.70.

Macquarie Group shares plummeted 5.7 percent after the investment bank reported half-year earnings that came in below estimates.

Across the Tasman, New Zealand's benchmark S&P/NX-50 Index edged up by 0.2 percent to 13,599.21 after closing lower in the previous session.

Europe

European stocks have moved to the downside on Friday amid persisting concerns about overvaluation in AI-related stocks and uncertainty over the Federal Reserve's next policy move.

U.K. house prices grew 0.6 percent month-on-month in October, which was the fastest since January as market activity remained strong ahead of the Autumn Budget, mortgage lender Halifax reported.

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.

British Airways parent IAG has moved sharply lower after it posted a drop in net profit and flat revenue in the third quarter, hit by weak demand for economy class seats on transatlantic flights.

Danish drug maker Novo Nordisk has also moved to the downside after increasing its offer for obesity start-up Metsera.

Meanwhile, ITV shares have soared. The broadcaster confirmed that it is in talks with Sky for a potential sale of its media and entertainment division.

German defense electronics group Hensoldt has also moved to the upside after reporting a sharp increase in orders in the first nine months of 2025.

Engine manufacturer Deutz has also risen reporting double-digit growth by revenue and new orders in the first nine months of 2025.

U.S. Economic News

The University of Michigan is scheduled to release it preliminary reading on consumer sentiment in the month of November at 10 am ET. The consumer sentiment index is expected to edge down to 53.2 in November after falling to 53.6 in October.

At 3 pm ET, the Federal Reserve is due to release its report on consumer credit in the month of September. Consumer credit is expected to increase by $10.5 billion in September after inching up by $0.4 billion in August.

Federal Reserve Governor Stephen Miran is also due to speak on "Stablecoins and Monetary Policy" before the BCVC Summit 2025 at 3 pm ET.