Stock Market Update

Equity futures point to a lower open as the recent AI rally meets some resistance following another session of thin leadership from the mega-caps yesterday. 

Palantir Technologies (PLTR 190.76, -16.42, -7.9%) moves sharply lower despite beating earnings estimates and raising guidance as investors weigh valuation concerns for both the stock and the broader AI trade. Shares of Palantir trade near 245 times forward earnings, so a pullback even after a solid earnings report is not surprising.

However, the stock weighs on other names in the AI trade, with all of the "magnificent seven" names trading lower in the pre-market. 

Investors have another broad slate of earnings reports to assess, though macro headlines are relatively quiet this morning. While the market's largest names are on track for a pullback this morning, investors have been quick to buy any dips on the path to record highs. 

In corporate news:

• Palantir Technologies (PLTR 190.76, -16.42, -7.9%) beat EPS expectations by $0.04, beat revenue expectations, guided Q4 revenues above consensus, and raised its FY25 revenue expectations above consensus.
• Spotify (SPOT 680.41, +36.32, +5.6%) beat EPS expectations by $1.32, reported revenues in-line, and guided Q4 revenues in-line. 
• Uber (UBER 95.12, -4.60, -4.6%) beat revenues and saw gross bookings up 21%. The company guided Q4 gross bookings above consensus, with EBITDA in-line.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Tuesday on a lower note with Japan's Nikkei (-1.7%) and South Korea's Kospi (-2.4%) reversing from record highs. Japan's Nikkei: -1.7%, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: -0.4%, India's Sensex: -0.6%, South Korea's Kospi: -2.4%, Australia's ASX All Ordinaries: -0.9%.

In news:

• South Korea's CPI accelerated to 2.4% yr/yr in October, but the Bank of Korea expects a swift return to the 2.0% target.
• Japan's Manufacturing PMI (48.2) remained in contraction for the fourth consecutive month.
• The Reserve Bank of Australia left its cash rate at 3.60%, as expected, and Governor Bullock left the door open to a potential future change in either direction.

In economic data:

• Japan's October Manufacturing PMI 48.2 (expected 48.3; last 48.3)
• South Korea's October CPI 0.3% m/m (expected 0.0%; last 0.5%); 2.4% yr/yr (expected 2.1%; last 2.1%)

Major European indices trade in the red. STOXX Europe 600: -1.0%, Germany's DAX: -1.2%, U.K.'s FTSE 100: -0.5%, France's CAC 40: -1.3%, Italy's FTSE MIB: -0.9%, Spain's IBEX 35: -1.0%.

In news:

• British Chancellor Reeves appears to be considering a tax hike to plug a GBP22 bln budget gap while Prime Minister Starmer told members of his party that the Autumn budget will include "tough but fair" decisions.
• European Central Bank policymaker Rehn said that economic uncertainty remains elevated while policymaker Patsalides said that competitiveness in the EU needs to be improved.

In economic data:

• France's September government budget balance -EUR155.4 bln (last deficit of EUR157.5 bln)
• Spain's October Unemployment Change 22,100 (expected 5,200; last -4,800)