Maxco Futures — U.S. equities fell sharply on Tuesday, weighed down by concerns over stretched valuations and signs of economic slowdown amid ongoing policy uncertainty. The S&P 500 dropped 1.17% to its lowest level in a week and a half, while the Nasdaq 100 plunged more than 2% following a broad sell-off in major technology and semiconductor stocks.
Investors have begun to question the sustainability of the recent rally that pushed key indexes to new record highs last month. Palantir Technologies became a symbol of this unease — despite reporting better-than-expected sales, its shares fell 7% as the company’s valuation reached the highest price-to-sales ratio within the S&P 500.
Two major Wall Street banks, Morgan Stanley and Goldman Sachs, warned of a potential market correction exceeding 10% within the next year, citing “overly optimistic” valuations after a 35% surge since April. Although U.S. Treasury yields eased to around 4.09%, providing limited support, overall market sentiment remains fragile.
On the fundamental side, the ongoing partial U.S. government shutdown, now entering its sixth week, has deepened fiscal uncertainty, delayed key economic data releases, and weighed on business activity. Meanwhile, vehicle sales have fallen to their lowest level in 14 months, adding to concerns that economic momentum is losing steam.
Globally, investors are closely watching the U.S. Supreme Court hearing on former President Trump’s “reciprocal” tariff policy, a ruling that could reshape U.S. trade dynamics if tariffs totaling USD 80 billion are deemed unlawful.
Meanwhile, European Central Bank (ECB) officials emphasized the need for policy flexibility, as Eurozone growth prospects weaken and inflation risks remain uneven across the region.
Ade Yunus, ST WPA
Global Market Strategies