U.S. stock indexes were poised for a muted open on Wednesday, as investors retreated from AI-linked stocks for a second day on concerns over ballooning valuations and parsed through a stronger-than-expected private payrolls report.
U.S. private payrolls rebounded sharply in October, the ADP employment report showed, calming some jitters around a weakening labor market.
“In the vacuum of government data we have to depend on what we can get and ADP is probably the most reliable source of indicating the health of the labor market right now,” said Art Hogan, chief market strategist at B Riley Wealth.
Wall Street’s main indexes were trading at all-time highs in late October before warnings of a market pullback by U.S. bank CEOs and bearish views from hedge funds on the AI trade prompted concerns of a bubble.
“When any asset class goes unidirectionally higher for an extended period of time, it is always healthy to get some of the froth taken off the top,” said Hogan, referring to the tech sell-off.
The benchmark S&P 500 has recently traded at 23.3 times forward earnings, the highest since the start of the century and well above its 20-year average of 16, according to LSEG data.
Corporate earnings were also on the radar. Shares of Advanced Micro Devices which have more than doubled this year, dipped 1.9% premarket despite an upbeat forecast.
Super Micro Computer also an AI player, slumped 7.4% after the server maker posted quarterly profit and revenue below Wall Street estimates.
Other big chip companies Nvidia, Broadcom and Intel also fell.
Health insurer Humana slipped 4.2% after its third-quarter results.
There was little reaction in stocks after democratic socialist Zohran Mamdani was elected as mayor of New York City.
At 08:41 a.m. ET, Dow E-minis were up 29 points, or 0.06%, S&P 500 E-minis were up 3 points, or 0.04% and Nasdaq 100 E-minis were up 3.5 points, or 0.01%.
GOVT SHUTDOWN SETS RECORD
With the U.S. government shutdown becoming the longest in history, private data has taken on increased importance to gauge the state of the economy.
The data fog has led to debate among Federal Reserve officials over the monetary policy path and diverging opinions on how best to handle the gap.
Also on deck will be a Supreme Court hearing on the legality of U.S. President Donald Trump’s tariffs.
China said it would suspend retaliatory tariffs on U.S. imports following last week’s meeting between the countries’ leaders, while 10% levies would be maintained with imports of U.S. soybeans facing a 13% rate.
Before the bell, Eli Lilly shares gained 1.5%. The company’s Danish rival Novo Nordisk lowered its fiscal-year profit and sales forecast.
Pinterest shares dropped 18.3% after the image-sharing platform forecast fourth-quarter revenue below expectations.
Bank of America shares slipped 1.1%. The second-largest lender in the U.S. raised its profitability target in a bid to grow its market share.
Unity Software shares jumped 16.8% after third-quarter profit and revenue above expectations.
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