Wall Street’s major indexes slipped to over one-week lows on Tuesday following warnings from leading U.S. banks about a potential market pullback, even as Palantir Technologies reported an upbeat revenue forecast that failed to impress investors. The slide highlights growing investor caution amid high equity valuations and uncertainties in the tech sector.

Big Banks Warn of Potential Market Drawdown

CEOs of Wall Street giants Morgan Stanley (MS.N) and Goldman Sachs (GS.N) cautioned that U.S. equity markets could experience a drawdown of 10% to 15%, underscoring concerns about overvalued stocks and potential market volatility. These warnings coincided with declining performance across major indexes, signaling increased risk aversion among investors.

Palantir Forecast Disappoints Investors

Palantir Technologies (PLTR.O) shares fell 8.7% despite the company forecasting fourth-quarter revenue above analysts’ estimates. Palantir’s stock has surged nearly 400% over the past year, driven largely by its strong AI and data analytics capabilities. The sharp drop reflects investor skepticism about sustaining rapid growth amid broader market concerns.

Tech Sector Leads Losses

Technology stocks were among the biggest losers on Tuesday. Nvidia (NVDA.O) dropped 2.1%, Alphabet (GOOGL.O) fell 1.6%, and Microsoft (MSFT.O) declined 1%, dragging the S&P 500 technology sector down by 1.5%. Analysts noted that despite a strong AI-driven rally earlier this year, doubts about monetization and the sustainability of tech spending contributed to the selloff.

Key Index Movements

At 09:45 a.m. ET:

• Dow Jones Industrial Average (.DJI) fell 301.32 points, or 0.64%, to 47,035.36.
• S&P 500 (.SPX) lost 62.20 points, or 0.90%, to 6,790.53.
• Nasdaq Composite (.IXIC) dropped 291.37 points, or 1.22%, to 23,543.35.

Meanwhile, the CBOE Volatility Index (.VIX), widely considered Wall Street’s “fear gauge,” approached a two-week high, signaling investor concern over potential market turbulence.

Mixed Earnings Reports

While third-quarter earnings remained resilient—with over 83% of S&P 500 companies beating analyst expectations, compared to a long-term average of 67.2%—certain individual results triggered volatility. Uber (UBER.N) fell 8.6% after missing quarterly operating profit expectations, while Henry Schein (HSIC.O) jumped 13.4% after raising its annual profit forecast.

Spotify (SPOT.N) and Shopify reversed premarket gains, ending the day down 3.5% and 3.1%, respectively, following their earnings announcements.

Upcoming Market Drivers

Investors are closely monitoring upcoming economic data, including Wednesday’s ADP National Employment Report, for insight into the U.S. labor market and potential Federal Reserve policy actions. Local elections, including New York’s mayoral race and gubernatorial contests in New Jersey and Virginia, are also under scrutiny for their potential economic and market impact.

Market Summary

Declining issues outnumbered advancing stocks by a ratio of 4.18-to-1 on the NYSE and 3.97-to-1 on the Nasdaq. The S&P 500 recorded five new 52-week highs and seven new lows, while the Nasdaq Composite posted 16 new highs and 137 new lows, reflecting uneven performance across sectors.