Nasdaq 100 and S&P500: Valuation Fears Deepen After CEO Warnings Shake Tech Stocks

Wall Street Pulls Back as Bank CEOs Flag Market Risk; Tech Stocks Weigh on Sentiment

U.S. stocks moved lower midday Tuesday, with major indexes under pressure after top bank executives issued cautionary comments about stretched equity valuations. At last check, the Dow was down over 240 points, the S&P 500 fell nearly 1%, and the Nasdaq lagged with a loss of more than 1.5%, dragged by tech weakness and investor rotation out of high-growth names.

Remarks from the CEOs of Morgan Stanley and Goldman Sachs raised concerns of a 10%–15% equity drawdown, prompting traders to reassess risk appetite following strong gains in recent months. Broader sentiment remains cautious, especially toward richly valued tech stocks.

Is AI Fatigue Starting to Set In?

Information technology was the worst-performing S&P sector by midday, down 1.6%, as Big Tech gave back some of its recent gains. Nvidia dropped 2.3%, Alphabet lost 1.8%, and Microsoft slipped 0.7%. Palantir sank 7.5% despite raising guidance, with traders seemingly taking profits after a sharp run-up this year.

Investors are watching closely for earnings from Advanced Micro Devices and Super Micro Computer after the bell. Both are seen as near-term sentiment drivers for AI-related trades. Elsewhere in tech, Spotify and Shopify each reversed early gains to trade lower after earnings, falling 2.2% and 3.9%, respectively.

Which Sectors Are Offering Support?

Financials edged higher, up 0.45%, with some support from defensive groups such as healthcare (+0.27%) and consumer staples (+0.09%). Real estate and utilities hovered near flat lines.

Meanwhile, industrials (-1.1%), energy (-1.07%), and consumer discretionary (-1.42%) underperformed. Norwegian Cruise Line dropped 14% on weaker-than-expected revenue, pulling Royal Caribbean (-5%) and Carnival (-8%) lower. In contrast, Yum Brands gained 7% on strong Taco Bell demand, and Denny’s jumped 50% following a buyout deal.

Which Stocks Are Making Headlines?

Uber slipped 7.4% midday after missing Q3 EBITDA expectations, though revenue topped estimates. Sarepta Therapeutics plunged 34% on disappointing trial results, while Zoetis lost 12% after cutting full-year guidance.

Bright spots included Henry Schein, up nearly 10% after strong earnings and an upward revision to its outlook. Wingstop gained 14% on solid same-store sales, and Sanmina climbed 16% following an upbeat quarter. Upwork also moved higher, up 7%, on better-than-expected earnings.

What Are Traders Watching Into the Close?

Market attention remains fixed on stretched valuations, a concern amplified by remarks from major bank CEOs predicting a potential 10%–15% market pullback. With Big Tech under pressure and high-multiple stocks showing signs of fatigue, traders are recalibrating expectations following months of strong AI-driven gains.

While Wednesday’s ADP employment data will factor into rate-cut expectations, valuation anxiety is now a key driver of market tone. Unless earnings and forward guidance from names like AMD and Super Micro Computer can reignite confidence in growth, equity markets may continue to drift lower into the week. Sentiment remains fragile heading into the close.

More Information in our Economic Calendar.