Broad declines in stock markets
Global stock markets fell significantly on Tuesday as investors questioned the sustainability of the recent tech rally and uncertainty about future Federal Reserve policy grew. Senior executives at several big Wall Street banks added to the concern by warning of a possible market correction.
Warnings from Goldman Sachs and Morgan Stanley chiefs
At the Global Financial Leaders’ Investment Summit in Hong Kong, Goldman Sachs CEO David Solomon predicted that stock markets will see a 10–20% correction within the next 12 to 24 months. Morgan Stanley CEO Ted Pick said such a correction could be a “healthy development” for the market rather than a sign of economic crisis.
The warnings came as the S&P 500 continues to set record highs — a situation many compare with the dot-com bubble.
Immediate market reaction
Following the remarks, Nasdaq futures fell about 1.3%, S&P 500 futures about 1% and Dow Jones futures 0.8%. The VIX, known as Wall Street’s “fear gauge”, hit a two-week high, signalling rising volatility and investor anxiety.
Tech stocks fall: even strong results aren’t enough
A clear sign of market doubts about tech overvaluation was Palantir Technologies’ 7% drop in pre-market trading — even though the company reported revenue of USD 1.18 billion and adjusted earnings of 21 cents a share, both above Wall Street forecasts. Investors’ main concern was Palantir’s sky-high valuation at 246 times annual earnings, compared with 33 times for Nvidia. Other tech giants also fell: Amazon −1.6% and AMD −2.5% ahead of its earnings report.
Fed uncertainty and a halt in economic data
Pressure on markets intensified when Fed officials expressed doubts about a rate cut at the December meeting. Chicago Fed President Austan Goolsbee said: “I haven’t made up my mind about the December meeting yet,” pointing to average inflation of 3.6% in recent months, which argues against faster easing. Lisa Cook and Mary Daly took similar positions, saying they were “not sure” about a cut. Meanwhile, the five-week US government shutdown has halted most official economic data releases, forcing the central bank to decide amid statistical uncertainty.
