HG MARKETS:

U.S. stock futures exhibited a mixed tone on Wednesday as persistent weakness in the technology sector weighed on sentiment, with investors increasingly questioning the sustainability of elevated equity valuations. By early morning trade, Dow Jones futures edged modestly higher, while S&P 500 and Nasdaq 100 futures extended losses, reflecting ongoing rotation away from high-flying tech names. This followed a broad sell-off on Tuesday, when the S&P 500 dropped 1.2%, the Dow slipped 0.5%, and the Nasdaq plunged 2%, underscoring the fragility of recent market optimism.

Investor confidence was further shaken after top Wall Street executives issued stark warnings about inflated market conditions. Morgan Stanley CEO Ted Pick cautioned that a 10–15% correction could serve as a “healthy normalization” after months of speculative fervor fueled by artificial intelligence euphoria. Similarly, Goldman Sachs chief David Solomon likened the surge in mega-cap tech stocks to “bubble-like dynamics,” unsustainable without stronger earnings foundations. Their remarks reignited fears that the market’s rally—driven by the so-called “Magnificent Seven”—may be nearing an inflection point marked by excessive concentration and valuation risk.

Investor sentiment remains clouded by mounting uncertainty surrounding the Federal Reserve’s next policy move, compounded by the ongoing government shutdown that has halted key economic data releases. The absence of critical indicators has left both policymakers and traders navigating in the dark, heightening market volatility. Divergent views among Fed officials have only deepened the ambiguity—some signaling openness to another rate cut in December if inflation continues to moderate, while others advocate for maintaining a restrictive stance amid strong labor and demand metrics.

Against this backdrop, heightened attention now turns to today’s ADP private-sector jobs report for October, which has regained prominence in the absence of official labor data. Forecasts point to a modest employment gain of around 32,000 following last month’s 32,000 decline. A result in line with projections would likely reinforce skepticism over the likelihood of a near-term Fed rate cut, keeping investors cautious amid a landscape of policy and data uncertainty.

The technology sector extended its downturn in premarket trading Wednesday, with AMD sliding over 4% despite strong earnings, as concerns over lofty valuations overshadowed its performance. Pinterest plunged about 18% after issuing weaker-than-expected revenue guidance, intensifying fears of a slowdown in digital advertising. As earnings season rolls on, McDonald’s is set to report before the market opens, with Fact Set data showing that roughly 82% of S&P 500 companies have so far surpassed expectations.