S&P Futures declined on Tuesday, influenced by downturns in artificial intelligence-related companies such as Palantir, as investors express rising apprehension regarding valuations in the shares that have been driving the bull market. Futures associated with the Dow Jones Industrial Average declined by 292 points, representing a decrease of 0.6%. S&P futures declined by 1%, whereas Nasdaq 100 futures experienced a decrease of 1.3%. Palantir shares experienced a decline of 7% in premarket trading, despite the software company surpassing market’s expectations for the third quarter and providing robust guidance, driven by expansion in its artificial intelligence sector. Palantir reports revenue of $1.33 billion for the current period, surpassing the $1.19 billion anticipated by analysts, as per LSEG. Revenue in the previous quarter surged by 63%.

“Their results were good but markets were disappointed at the lack of company visibility for the whole of 2026,” noted Jim Reid. He also referenced valuation concerns surrounding Palantir. Palantir, which experienced a 173% increase this year through Monday, is trading at over 200 times forward earnings. Consequently, investors in this stock and other AI companies anticipate that these firms will need to significantly enhance their profit and revenue projections to validate ongoing purchases of their shares. Palantir’s current price-to-earnings ratio heading into Tuesday’s trading was approaching 700. Oracle, which has a current P/E of 60 and a forward P/E of 35, experienced a 2% decline in premarket trading, reducing its 55% gain for the year. Chipmaker AMD, which has experienced a more than twofold increase this year and currently boasts a P/E ratio of 149, saw a decline of over 2%. Other AI stocks, including Nvidia and Amazon, experienced declines exceeding 1% in the premarket.

The forward price-earnings ratio of the S&P 500 has surged to above 23, approaching the highest levels observed since 2000, according to reports, driven by gains in AI stocks. Investor sentiment was further dampened by remarks made by the chief executives of Goldman Sachs and Morgan Stanley. Overnight, Goldman’s David Solomon stated that it is “likely there’ll be a 10 to 20% drawdown in equity markets sometime in the next 12 to 24 months.” Ted Pick remarked: “We should also welcome the possibility that there would be drawdowns, 10 to 15% drawdowns that are not driven by some sort of macro cliff effect.” Market has concluded a session characterized by mixed outcomes. The S&P 500 and Nasdaq concluded Monday on an upward trajectory, whereas the Dow experienced a decline exceeding 200 points. The S&P 500, as of Monday, was approximately 1% shy of reaching a new record, having closed above 6,800 for the first time last month, during which the major benchmark recorded an additional 2% increase.

On Monday, over 300 stocks within the broad-market index finished in negative territory, intensifying worries regarding weak market breadth and elevated levels of concentration in the technology sector. This concern is particularly pronounced given that the number of S&P 500 stocks that experienced gains last month was less than those that faced declines. “Our biggest complaint about U.S. equities is the extremely disjointed state of breadth, whereby a handful of tech mega-caps have masked some significant red flags beneath the surface,” stated Adam Crisafulli in a note. Additional concerns encompass a potential government shutdown, which has now reached 35 days, thereby matching the historical record for duration. Furthermore, there are apprehensions regarding whether the Federal Reserve will implement a third consecutive rate cut during its upcoming meeting in December. Market participants anticipate a reduction in interest rates to rationalize elevated stock valuations and support a decelerating economy and labor market. Fed Governor Lisa Cook indicated on Monday that the decision in December would be contingent upon forthcoming data and the potential alleviation of tariffs’ impact on inflation.