US stock futures edged lower on Wednesday, extending Wall Street’s cautious tone after a sharp tech-led selloff.
S&P 500 futures slipped 0.3%, while Nasdaq 100 futures fell nearly 0.4%. European markets initially tracked the decline before paring losses as investors awaited the New York open.
The move comes after a bruising session for US equities on Tuesday, when the S&P 500 lost 1.2%, the Nasdaq dropped 2%, and the Dow fell 0.5%.
Much of the weakness centred on megacap tech stocks, with Palantir tumbling more than 8% despite posting stronger-than-expected quarterly results. Its lofty valuation, more than 200 times forward earnings, has become emblematic of the market’s growing unease around the AI trade.
Still, not all sentiment is bearish. Some investors argue that the long-term growth story for tech remains intact, underpinned by relentless spending on AI infrastructure and data centres.
With the US government shutdown still halting most official data releases, traders are turning to alternative indicators to gauge economic momentum. The ADP private payrolls report, weekly mortgage applications, and ISM services data are due Wednesday and could help fill in the gaps.
Earnings season is also keeping investors busy. Of the 360 S&P 500 companies that have reported so far, around 82% have beaten analyst expectations, according to FactSet, putting the index on track for blended earnings growth above 12%.
After a volatile few sessions, Wall Street now faces a balancing act, weighing stretched tech valuations against an economy that continues to show resilience.