US equities fell on Tuesday as renewed worries over stretched valuations in artificial intelligence-linked leaders pressured risk appetite and narrowed market breadth. Despite broadly resilient earnings, the pace of capex and profit growth now implied for the sector drew caution, which was compounded by senior Wall Street executives flagging the likelihood of a meaningful drawdown over the next year. The weakness spilled into global markets, with Europe reversing early-month gains and Asia turning lower amid limited fresh catalysts, while oil eased on demand concerns and US yields drifted down as investors assessed softer manufacturing signals and delayed data.

Key Takeaways:

  • S&P 500 Slides as Valuation Anxiety Builds: The S&P 500 fell 1.17% to 6,771.55 as investors questioned whether profit growth can keep pace with aggressive AI-driven capex plans. 
  • Nasdaq Drops 2% on Tech Weakness: The Nasdaq Composite declined 2.04% to 23,348.64, led by pullbacks in high-growth software and chips. Palantir fell about 8% despite strong guidance, while Oracle and AMD lost nearly 4% each; Nvidia and Amazon also retreated.
  • Dow Declines But Remains More Insulated: The Dow shed 0.53% to 47,085.24, with caution reinforced by remarks from Goldman Sachs and Morgan Stanley chiefs highlighting the probability of 10–20% drawdowns ahead.
  • European Stocks Reverse Gains as Earnings and Labour Data Shift Sentiment: The Stoxx 600 closed around 0.4% lower, reversing the early-week optimism that followed the start of the new month. The FTSE 100 rose 0.14% after UK gilt yields eased to 4.419% following comments from Finance Minister Rachel Reeves signalling difficult fiscal decisions ahead of the 26 November budget. Meanwhile, the CAC 40 fell 0.52% and the DAX declined 0.76% as investors weighed corporate earnings and global equity weakness. Italy’s FTSE MIB edged 0.09% higher, supported by stronger local results. Spain’s unemployment rose by 22,101 in October, exceeding expectations and reflecting increases across services, agriculture and manufacturing. Shares in Orsted fell after the company agreed to sell a 50% stake in its Hornsea 3 offshore wind farm project, while BP gained after reporting quarterly profit above expectations.
  • Asia-Pacific Markets Mixed as Investors Reassess AI Momentum: Japan’s Nikkei 225 declined 1.74% and the Topix fell 0.65% as manufacturing PMI data continued to soften. South Korea’s Kospi slipped 2.37% after a strong multi-session rally driven by global AI demand and structural reforms, although the Kosdaq rose 1.31% as rotational flows continued. The South Korean government announced plans to triple AI investment in 2026 to 10.1 trillion WON in a bid to position the country among the world’s top three AI powers. Australia’s ASX 200 fell 0.91% after the Reserve Bank of Australia left its cash rate unchanged at 3.6%. Hong Kong’s Hang Seng declined 0.79% and the mainland CSI 300 fell 0.75%, extending recent weakness amid subdued domestic demand and persistent caution toward Chinese consumer and industrial sectors.
  • Oil Prices Ease on Weak Demand Signals and Stronger Dollar: Brent crude settled 0.69% lower at $64.44 a barrel, while WTI fell 0.8% to $60.56. Softer manufacturing readings in both the US and Asia weighed on demand expectations, while a stronger dollar added pressure to commodities. OPEC+’s decision to pause output hikes early next year provided some support but was insufficient to offset the broader downward pressure.
  • Treasury Yields Slip as Data Releases Remain Delayed: The 10-year Treasury yield fell to 4.085%, with shorter maturities also edging lower. The ongoing US government shutdown continues to delay key economic releases, making it more challenging for investors to assess real-time economic conditions. The US ISM manufacturing index came in at 48.7%, below expectations, reinforcing concerns about slowing industrial activity as markets await upcoming employment data for greater clarity.

FX Today:

  • EUR/USD Extends Downside Pressure Beneath Major Averages: EUR/USD closed at 1.1479, down 0.35%, after trading between 1.1534 and 1.1473. The pair is now trading firmly below the 50-day SMA at 1.1676 and the 100-day SMA at 1.1664, confirming increasing downward pressure after the recent loss of support. The broader medium-term trend that had been flattening is now showing signs of shifting more decisively bearish, as price action continues to create new short-term lows. Immediate resistance is located at the session high of 1.1534, followed by the 50-day SMA at 1.1676. Initial support is found at 1.1473, with the 200-day SMA at 1.1329 acting as the next major downside level. A failure to hold above 1.1473 would likely accelerate bearish momentum.
  • GBP/USD Break Lower Accelerates as Support Zones Give Way: GBP/USD closed at 1.3018, down 0.92%, after trading between a high of 1.3145 and a low of 1.3010. The pair has closed decisively below the 200-day SMA at 1.3255, extending the breakdown already signalled by prior declines beneath the 50-day SMA at 1.3418 and the 100-day SMA at 1.3456. The move confirms strong bearish momentum and establishes new multi-month lows, with sellers remaining firmly in control. Immediate resistance is at 1.3145, followed by the 200-day SMA at 1.3255. Initial support is located at the session low of 1.3010, with a sustained daily close below this level likely opening further downside interest towards psychological round numbers.
  • AUD/USD Pressured Toward Long-Term Support Threshold: AUD/USD closed at 0.6485, down 0.79%, after trading between a high of 0.6540 and a low of 0.6481. The pair is now positioned below the 50-day SMA at 0.6561 and the 100-day SMA at 0.6537, indicating mounting short-term bearish momentum as price moves toward the 200-day SMA at 0.6444. Recent price action has broken through prior support levels, signalling increased selling interest and vulnerability to further declines should the 200-day SMA fail to hold. Resistance is located at 0.6537 and the session high at 0.6540, while initial support sits at 0.6481, followed by 0.6444.
  • EUR/GBP Rally Extends to Fresh Multi-Month Highs: EUR/GBP closed at 0.8818, up 0.61%, after trading between a high of 0.8821 and a low of 0.8757. The pair remains firmly above the 50-day SMA at 0.8700, the 100-day SMA at 0.8666, and the 200-day SMA at 0.8541, reinforcing a strong bullish trend supported by consistent higher highs and higher lows. Immediate support lies at 0.8757, with dynamic support at the 50-day SMA at 0.8700. The session high of 0.8821 marks the nearest resistance, with no clear overhead reference levels visible, suggesting scope for continued upside if momentum persists.
  • USD/JPY Pauses Within Strong Uptrend: USD/JPY closed at 153.66, down 0.36%, after trading between 154.48 and 153.32. Despite the modest pullback, the pair remains well above the 50-day SMA at 148.71, the 100-day SMA at 148.30, and the 200-day SMA at 147.71, preserving the broader bullish structure. Immediate resistance is located at 154.48, while initial support sits at 153.32. A break below 153.32 would imply a deeper corrective phase toward the 50-day SMA, while a close above 154.48 would signal a continuation of the uptrend and open the way for further highs.
  • Gold Suffers Sharp Decline, Testing Key Support: Gold closed at $3,939, down 1.58%, after trading between $4,006 and $3,929. The session marked a notable bearish extension, breaking below recent short-term consolidation while still maintaining position above the 50-day SMA at $3,843, the 100-day SMA at $3,596, and the 200-day SMA at $3,345. Immediate resistance is located at $4,006, while initial support lies at $3,929, followed by the 50-day SMA at $3,843. A sustained move below $3,929 would likely deepen the correction, while a recovery above $4,006 would be required to signal buyers regaining control.

Market Movers:

  • Crypto-Linked Shares Drop as Bitcoin Falls: Bitcoin slid more than 6% to a 4.5-month low, pressuring Coinbase, Marathon Digital, Riot Platforms and MicroStrategy, all down 6%.
  • Sarepta Tumbles on Trial Miss: Sarepta Therapeutics sank over 33% after a study of Amondys 45 and Vyondys 53 in Duchenne muscular dystrophy missed a primary endpoint.
  • Cruise Lines Sell Off on Revenue Miss: Norwegian Cruise Line dropped over 15% after Q3 revenue of $2.94bn missed the $3.02bn consensus; Carnival fell more than 9% and Royal Caribbean more than 7%.
  • CDW Weakens on Softer Sales: CDW fell more than 8% after Q3 net sales of $5.74bn missed the $5.76bn consensus.
  • Palantir Pulls Back on Valuation Despite Beat: Palantir fell over 7% even as Q3 sales beat; a price-to-sales ratio near 85, the highest in the S&P 500, amplified valuation concerns.
  • Uber Eases on Cautious Outlook: Uber declined more than 4% after guiding Q4 adjusted EBITDA to $2.41bn–$2.51bn, with the midpoint below the $2.49bn consensus.
  • Yum! Brands Climbs on EPS Beat: Yum! Brands added more than 7% after Q3 adjusted EPS of $1.58 beat $1.48 consensus.
  • Waters Rises on Raised Outlook: Waters gained over 6% after adjusted EPS of $3.40 beat $3.21 and guidance was lifted to $13.05–$13.15.

Valuation tension around AI leaders drove a broad reset in risk on Tuesday, with market breadth narrowing and investors demanding clearer evidence that earnings can sustain elevated multiples. Global equities reflected the shift in tone as Europe and Asia eased, oil softened on demand concerns, and US yields dipped alongside softer manufacturing signals. With key data and central bank communications ahead and some US releases delayed, markets appear set for a more selective, evidence-driven phase as positioning recalibrates into year-end.