It has been a rough Tuesday for Wall Street, with tech and AI stocks dragging the broader market down as investors questioned whether valuations have gotten ahead of themselves.
The S&P 500 fell 1.1%, the Nasdaq Composite lost 1.9%, and the Dow Jones dropped 0.6%.
AI darling Palantir was in the spotlight, sliding over 8% despite beating third-quarter estimates and posting strong guidance. The company, up more than 150% this year, now trades at over 200 times forward earnings, prompting some investors to question whether such lofty expectations are sustainable.
Oracle, AMD, Nvidia, and Amazon also pulled back, reflecting a growing sense that the recent tech rally may be stretching valuations.
“The S&P 500’s forward P/E is approaching the highest levels since 2000,” said Anthony Saglimbene of Ameriprise. “Profits are solid, but the pace of investment in Big Tech is leading investors to ask if growth can actually keep up.”
Concerns were compounded by comments from Goldman Sachs’ David Solomon and Morgan Stanley’s Ted Pick. Solomon suggested the market could see a 10–20% drawdown over the next 12–24 months, while Pick said investors should expect 10–15% corrections even without a macro shock.
Beyond tech, cryptocurrencies also tumbled. Bitcoin fell over 6%, dipping close to $100,000, amid concerns about liquidity in a market still weighed down by the ongoing US government shutdown.
Earnings continued to roll in, but not all news pleased investors. Uber posted solid results, but shares fell slightly, while Norway’s sovereign wealth fund announced it would oppose Tesla CEO Elon Musk’s $1 trillion pay package, sending the stock down more than 3%.
With the US government shutdown now entering its 35th day, key economic data remains delayed, keeping traders on edge. Questions about corporate earnings, high-flying tech valuations, and political gridlock in Washington all combined to make Tuesday a choppy session for the markets.
