Futures Slide As Palantir, Cryptos Tumble Amid Broad Momentum Revulsion

Futures Slide As Palantir, Cryptos Tumble Amid Broad Momentum Revulsion

US equity futures are under serious pressure this morning with all 3 indices down more than 1% with Palantir’s strong beat and raise not only failing to spur follow-through buying but sparking what appears to be momentum chasing revulsion. Combined with a pullback in crypto and some hawkish Fed remarks, an unwind in pockets of the hyper-momentum trade is taking hold.  Separately, headlines pointing to a cautious comments from execs at a Financials industry conference are not helping. As of 8:00am ET, S&P futures are down 1% (and well off session lows hit shortly after the European open), with Nasdaq 100 futs down 1.3%; underperformance in the latter and the broader weakness in risk assets can be traced back to Palantir shares falling over 4% postmarket after earnings (they’re down almost 8% in premarket) while Mag7/Semi names slide down 1% – 3%, though staples are in the green. Sharp declines across various cryptocurrencies has also hampered sentiment as Bitcoin loses another 3% and drops below $104,000, a level first seen in December 2024. At a financial summit organized by the Hong Kong Monetary Authority, several CEOs flagged pullback / correction risk while also flagging risks from valuation, a lack of AI ROI, and private credit. Meanwhile, as noted here yesterday, PLTR had a decent print but as JPMorgan writes today, it "trades at more than 300x its fwd multiple, illustrating the CEOs point on valuation. This comes at a time when several clients flagged the narrow breadth as a red flag for the mkt." Across assets, there is a global risk-off tone with bonds and USD bid, while all 3 commodity complexes are for sale, although oil is a notable laggard. Earnings from HC could trigger a further rotation towards defensive plays. 

In premarket trading, all Mag 7 stocks are lower (Tesla -2.4%, Nvidia -1.9%, Alphabet -1.6%, Amazon -1.3%, Meta Platforms -1.3%, Microsoft -0.6%, Apple -0.7%). 

• Archer-Daniels-Midland (ADM) sinks 9% after the grain handler cut its adjusted earnings per share guidance for the full year. The firm also reported revenue for the third quarter that trailed the average analyst estimate.
• Eaton Corp (ETN) falls 4% after the power-equipment company forecast adjusted earnings per share for the fourth quarter of $3.23 to $3.43, a range with a midpoint below what analysts expected. Net sales missed estimates in the third quarter.
• Fabrinet (FN) rises 6% on light volume after fiscal first quarter results and second quarter guidance beat estimates.
• Global Payments (GPN) rises 7% after posting quarterly results.
• Insperity (NSP) sinks 27% after the professional services company cut its adjusted earnings per share guidance for the full year. The reduced outlook missed the average analyst estimate.
• Norwegian Cruise (NCLH) falls 8% after the cruise operator reported revenue for the third quarter that missed the average analyst estimate.
• Palantir Technologies (PLTR) falls 7%, taking a breather after rallying more than 170% this year. The data-analysis software company raised its full-year forecast and reported third-quarter results that beat expectations. While analysts are broadly positive on the report, they flag concerns over the stock’s premium valuation.
• Paymentus Holdings (PAY) rises 9% after the online bill payment company provided fourth quarter guidance that topped estimates.
• Sarepta (SRPT) tumbles 39% after the drugmaker says the study of Amondys 45 and Vyondys 53 in patients with Duchenne muscular dystrophy missed primary endpoint, raising questions about their future.
• SunCoke Energy (SXC) rises 5% after narrowing its adjusted Ebitda guidance for the full year.
• Uber Technologies Inc. (UBER) slips 3% after the company posted a miss on third-quarter operating income and issued an adjusted earnings forecast for the current period that also fell short of analysts’ estimates.
• Upwork (UPWK) rises 19% after the online recruitment company reported third-quarter results that beat expectations and raised its full-year forecast. Analysts highlighted growth in gross services volume as a notable positive, with AI acting as a tailwind.
• Whitestone REIT (WSR) climbs 15% as people familiar said MCB Real Estate is making a renewed push to acquire the company.
• Yum! Brands Inc. (YUM) ticks 2% higher after initiating a strategic review for Pizza Hut, exploring options for the struggling chain.
• Zoetis Inc. (ZTS) falls 7% after the animal health company cut its revenue guidance for the full year.

In corporate news, Norway’s sovereign wealth fund will vote against the $1 trillion pay package proposed for Tesla CEO Elon Musk. Starbucks agreed to sell a majority stake in its China business to Boyu Capital at a $4 billion enterprise value. Amazon alleged that a Berkshire Hathaway-owned utility in Oregon is failing to provide sufficient power for four new data center facilities.

Global risk slid after Palantir Technologies raised its annual revenue outlook to $4.4 billion and outpaced analyst estimates for third-quarter sales, yet its shares first jumped only to tumble on concerns about the company’s lofty valuation after a record run-up.

“On Palantir, there’s been quite a lot of ‘sell-on-the-news,’ particularly for stocks which had outperformed prior to their earnings,” said Karen Georges, a fund manager at Ecofi Investissements in Paris. “When you have lofty valuations, it’s really not surprising to see harsh market price action.”

Meanwhile, as we noted last night, Goldman calculates that CTAs will be small sellers of equities under every scenario over the coming week. At the same time, Wall Street CEOs are warning of a potential equity market drop. Capital Group’s CEO Mike Gitlin notes corporate earnings are strong but “what’s challenging are valuations,” and Morgan Stanley’s Ted Pick said markets have come a long way, but there’s still “policy error risk” in the US and geopolitical uncertainty. 

Besides the overnight tumble in global stocks, cryptocurrencies are also suffering, with both Bitcoin and Ether mimicking the moves in equity futures and gold is hitting the lows of the day to give this the air of a generalized slide. The Bloomberg Dollar Spot Index is at the highest level since early August. 

Also adding to the negative sentiment Tuesday was increased uncertainty over the Fed’s policy outlook. Officials presented mixed messages Monday, reflecting divisions within the central bank ahead of its December meeting. Austan Goolsbee emphasized persistent inflation risks, and said the government shutdown shifts risks to inflation, with lack of recent data leaving the central bank “with one eye covered.” Lisa Cook pointed to growing labor-market fragility. Mary Daly said policymakers should “keep an open mind” about another rate cut, and Stephen Miran noted that policy remains restrictive.

“It’s the Fed again,” said Anna Wu, a cross-asset strategist at Van Eck. “The inflation comment startled the markets and weighed on sentiment.”

For the tape to broaden sustainably, we’ll likely need clearer Fed policy visibility that reduces risk premiums across small-caps and cyclicals, evidence of further top-line firming outside AI or a soft landing with labor and inflation data putting stagflation fears to rest according to Bloomberg, whose equity strategists note small-cap stocks can’t shake the “big-cap shadow” as sector dispersion widened through October. 

Despite Tuesday’s losses, positioning on the S&P 500 remains bullish and extended, but with profit-taking risks less evident, according to Citigroup Inc. strategists. “We have the stock market trading at an all-time high, whether you look at the US or Europe,” Benedicte Lowe, equity derivatives strategist at BNP Paribas SA, told Bloomberg TV. “Any investor is looking for any signs of downward news. Our view remains bullish until the year-end.”

A quick look at earnings, Out of the 336 S&P 500 companies that have reported so far in the earnings season, 82% have managed to beat analyst forecasts, while 14% have missed. Apollo Global, Eaton, Global Payments, Marriott, Norwegian Cruise Line, Pfizer, Shopify, Spotify, Uber, Yum! Brands and Zoetis are among companies expected to report results before the market opens. Shopify will likely highlight several advances in key or emerging-growth avenues, including acquisition of large merchants and agentic commerce according to Bloomberg Intelligence. Earnings from AMD, Amgen, Arista, Live Nation, Pinterest, Rivian and Super Micro Computer follow later in the day.

Corporate earnings are strong but “what’s challenging are valuations,” said Mike Gitlin, president and chief executive officer of investment manager Capital Group, during the Hong Kong Monetary Authority financial summit. 

In Europe, the Stoxx 600 falls 1.6% following a broadly weaker Asian session. All 20 sectors are in the red but mining, retail and telecommunications are the worst performers. Telefonica is among the biggest laggards after reducing its free-cash-flow guidance for the full year. Here are the biggest movers Tuesday:

• Coloplast shares rise as much as 3.4%, reversing an earlier 3% decline, after the Danish medical-products maker forecast organic revenue growth of about 7% for the 2026 fiscal year
• Geberit gains as much as 3.7%, the most in almost three months, after the Swiss building materials firm increases its 2025 net sales guidance. Analysts expect this to translate into some minor uplift to consensus numbers
• Philips shares rise as much as 3.9%, the most in more than three months, after the Dutch medical technology firm reported better-than-expected adjusted Ebita for the third quarter
• Oerlikon rises as much as 9.1%, before paring some of those gains, after recording a beat on orders in the third quarter. While analysts welcome this strong order development for the Swiss industrial technology group
• Elmos Semiconductor gains as much as 9.7%, the most since April, as Warburg says that third-quarter results came in slightly ahead of expectations
• Wereldhave shares rise as much as 3.2% after the investment company posted strong results and raised the midpoint of its guidance, according to analysts
• Kinepolis shares rise as much as 6.3% after the movie theater operator agreed to buy the operations of US firm Emagine Entertainment. Degroof Petercam said this is “clearly the first decent transaction” struck by the company
• Telefonica shares slide as much as 11%, the most in more than five years, after the telecom operator reduced free cash flow guidance for 2025 while seeing a higher leverage ratio at the end of the year
• BioMerieux slides as much as 4.1% after cutting its organic sales forecast for the full year, and delivering revenue below expectations in the third quarter, impacted mainly by worse-than-expected Molecular respiratory sales
• Fresenius Medical Care shares drop as much as 6.5%, the most in roughly three months, after the German provider of dialysis care and equipment reported third-quarter results. US same market treatment grew 0.1% during the period
• Schaeffler falls as much as 5.8%, with analysts saying valuation is starting to look stretched. The German firm’s results were seen in-line with a pre-release and brokers called increased momentum in humanoid activities supportive
• AB Foods falls as much as 2.9% after the UK conglomerate reported earnings and said it is conducting a review that could lead to a separation of the Primark clothing retailer and its Food units
• Domino’s Pizza Group shares fall as much as 2% in London, extending year-to-date losses, as analysts pointed to declining volumes in the company’s third-quarter trading update

Earlier in the session, Asian stocks declined, with South Korea leading the retreat, as traders sold some high-flying tech shares and parsed comments from Federal Reserve officials to gauge the outlook for interest rates. The MSCI Asia Pacific Index dropped as much as 1%, its biggest intraday slump since October 17, with chipmakers Samsung Electronics and TSMC among the biggest drags. SK Hynix slipped after Korea’s exchange issued an investment caution on the stock after its big rally. Key gauges also declined in Australia, China and Taiwan. Risk-off sentiment comes after Fed official Austan Goolsbee said he’s more concerned about inflation than the labor market, spurring caution over the outlook for further rate cuts. With the MSCI Asian benchmark and other indexes around the region trading near record highs, traders have been hoping for supportive policy and comments to help extend the rallies. Stocks also fell in Hong Kong and India. Meanwhile, gauges in Vietnam and the Philippines rebounded as sentiment improves.

In FX, the yen is up 0.5% against the greenback and at the top of the G-10 FX leaderboard, boosted by haven demand as global equity markets decline. Some modest jawboning from the Japanese finance minister will have helped. The pound falls 0.5%, although its the kiwi and krone leading declines against the greenback.

In rates, treasuries gain, pushing US 10-year yields down 3 bps to 4.09%; US yields are richer by 2bp to 3bp across the curve with 5s30s spread wider by around 1bp. Gilts extended gains during a speech by Chancellor Reeves before fading. UK 10-year borrowing costs are down 3 bps. IG dollar issuance slate has four offerings so far. Monday’s volume was second-highest this year — $34.5 billion from 13 borrowers, led by Alphabet with an $17.5 billion eight-part offering. UK bonds outperformed their European peers after Chancellor of the Exchequer Rachel Reeves signaled that further tax increases may be needed to achieve fiscal consolidation in this month’s budget, while stressing the importance of curbing inflation and keeping borrowing in check. The 10-year gilt yield fell two basis points to 4.41%, while the pound weakened as traders priced in a quicker pace of interest-rate cuts.

Today's economic calendar slate empty for the session as US government data continue to be postponed by shutdown that began Oct. 1. Fed speaker slate also blank after Vice Chair for Supervision Michelle Bowman spoke earlier on banking supervision and monetary policy

Market Snapshot

• S&P 500 mini -1.2%
• Nasdaq 100 mini -1.5%
• Russell 2000 mini -1.6%
• Stoxx Europe 600 -1.5%
• DAX -1.7%
• CAC 40 -1.6%
• 10-year Treasury yield -3 basis points at 4.08%
• VIX +2.9 points at 20.05
• Bloomberg Dollar Index +0.2% at 1223.46
• euro -0.1% at $1.1506
• WTI crude -1.6% at $60.1/barrel

Top Overnight News

• The outlines of a potential deal to end the [US government] shutdown are starting to take shape, although the talks are very fragile at this point and there’s still a long way to go: Punchbowl. 
• Senate Majority Leader John Thune said he was “optimistic” an agreement can be reached this week to end the five-week shutdown as bipartisan rank-and-file talks make progress. Politico
• A string of alleged frauds by corporate borrowers is spurring a reckoning across Wall Street, sending bankers and investors scrambling to prevent future blowups. WSJ
• Trump said he is going to ask the Transportation Secretary to take a look at terminating New York City congestion pricing, while he added it is highly unlikely that he will be contributing federal funds to NYC if Mamdani wins the mayoral race.
• Insurers shopping for better credit ratings on their private credit assets are creating a “looming systemic risk” to global finance, the chair of UBS has warned. FT
• China called on the US to avoid sensitive issues so that a trade truce can hold. Ambassador Xie Feng named Taiwan, democracy and human rights, China’s political system, and development rights as Beijing’s four red lines. BBG
• Chancellor of the Exchequer Rachel Reeves declined to reiterate Labour’s manifesto commitment against broad-based tax hikes, as she made an unusual appeal to the British public to support her upcoming budget. BBG
• China has increased subsidies that cut energy bills by up to half for some of the country’s largest data centers, as Beijing steps up efforts to boost its domestic chips industry and compete with the US. FT
• South Korea’s headline inflation accelerated at a faster-than-expected pace to a 15-month high in October, lifted by higher prices for agricultural and livestock products. Inflation accelerated to +2.2% Y/Y in Oct (on a core basis), above the consensus forecast of +2% and up from +2% in Sept. WSJ
• RBA left rates unchanged, as expected, and signaled unease with the recent rise in inflation (the RBA said it expects rates to stay at their present level for “a while”). RBA
• Chicago Fed President Austan Goolsbee said the government shutdown has left the Fed with “one eye covered,” forcing caution on rates. While he still sees room to ease, Goolsbee told Semafor he worries about “front-loading” cuts without more data. BBG
• Wall Street seems unworried about the lackluster breadth of the equity market rally, despite parallels to the tech bubble of the late 1990s. The charge is increasingly led by a handful of tech companies, with the ratio of S&P 500 Equal Weighted Index to the S&P 500 at its lowest since 2003. BBG

Trade/Tariffs

• US Treasury Secretary Bessent said he will be at the Supreme Court to emphasise the importance of tariffs, according to Fox News.
• South Korea’s Industry Ministry said it is to expand financial and policy support for exporters facing US and EU steel tariffs, while South Korea will restructure the steel sector as the industry shows mounting signs of a crisis, and will also take pre-emptive steps to adjust production capacity in oversupplied pro

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