Stock Market Today: Live Updates

Stocks fell on Tuesday, weighed down by declines in artificial intelligence stocks such as Palantir, as investors grew increasingly concerned about the valuations of bull market-leading stocks.

of S&P500 Although it fell by 0.9%, Nasdaq Composite It decreased by 1.5%. of Dow Jones Industrial Average Lost 193 points (0.4%).

Palantir Shares fell 7% even as the software company beat Wall Street expectations for the third quarter and provided strong guidance, boosting growth in its artificial intelligence business. Palantir is expected to have revenue of $1.33 billion for the current fiscal year, beating analysts’ expectations of $1.19 billion, according to LSEG. Last quarter’s revenue increased 63%.

With the company’s stock up more than 150% this year and trading at more than 200 times forward earnings, investors in this name and other AI stocks expect the company to continue to significantly raise its earnings and revenue outlook to justify continuing to buy the stock. Palantir’s current P/E ratio heading into Tuesday’s trading was nearing 700.

oracleThe current P/E ratio is 60 and the forward P/E ratio is 35, down 2% and wiping out this year’s 50% gain. chip manufacturer AMDhas more than doubled this year, and its current P/E ratio of 149 has fallen by more than 1%. Other AI stocks etc. Nvidia and Amazon I also pulled back.

The rise in AI stocks has pushed the S&P 500’s forward price-earnings ratio to more than 23 times, near its highest level since 2000, according to FactSet. As these stocks have driven the overall market to new heights in recent months, Ameriprise’s Anthony Saglimbene said in an interview with CNBC that valuations are starting to get “very high” absent a rebound.

“We haven’t really seen any major correction or real pressure on stock prices since April,” said the firm’s chief market strategist. “Earnings are good, but I think investors are starting to ask themselves questions based on the pace of returns.” [capital expenditure] With investments from some of these major Big Tech companies, the question is, “Are we going to see enough earnings growth next year to justify the level of capital investment?”

Investor confidence further eroded on Tuesday with comments from the chief executives of Goldman Sachs and Morgan Stanley. Overnight, Goldman’s David Solomon said, “We are likely to see a 10% to 20% drawdown in the stock market over the next 12 to 24 months.” Morgan Stanley CEO Ted Pick also said, “We should also welcome the possibility of a drawdown that is not due to some kind of macro cliff effect, a drawdown of 10% to 15%.”

“The fundamentals remain strong, but I fully expect to see some period of pullback,” Saglimbene told CNBC. “We’ll have to see if that translates into a 5%, or 10%, or 15% correction by the end of the year.”

Wall Street is emerging from a mixed session. The S&P 500 and Nasdaq ended Monday higher, but the Dow fell more than 200 points. Through Monday, the S&P 500 index was just about 1% off its record of closing above 6,800 for the first time in history last month, with the major index posting an additional 2% gain.

More than 300 stocks in the broad-market index closed in the red on Monday, raising concerns about weak breadth and high tech concentration, especially after the number of S&P 500 stocks that rose last month was smaller than the declines.

“The market has been pretty tight in recent months,” Sagrimbene said. “If the momentum in AI and technology slows down or stagnates in the short term, it will actually [aren’t] If other areas are doing well as well, and we don’t have a lot of hard data on the economy, and the rest of the S&P 500 isn’t as profitable, where do we go?”