Markets wobble after tech selloff and Democratic local wins
Markets wobble after tech selloff and Democratic local wins. U.S. equities fell as a surprise pullback in Big Tech and chip names spread across global bourses, while Democrats scored unexpectedly strong results in local races. That combination is driving short-term risk aversion and forcing investors to reassess the crowded trades that have powered this year. In the near term, traders will watch earnings, payroll data and Supreme Court hearings for fresh catalysts. Over the long term, heightened valuation scrutiny and political developments could alter capital flows across the United States, Europe, and Asia. The moves come after a month of gains and raise questions about whether this is a correction or the start of something larger.
Fresh selloff in tech ripples through global markets
A rare shakeout in Big Tech and chip stocks triggered a broad market wobble. The S&P 500 and Nasdaq each fell more than 1 percent on Tuesday, marking their worst day in almost a month. The declines came without a single clear catalyst. Instead, investors pointed to growing unease over sky high valuations that had become more visible after a period of strong gains.
Several high growth names that had doubled or more this year saw acute moves. Palantir (NYSE:PLTR) fell sharply after an earnings stumble, while Advanced Micro Devices (NASDAQ:AMD) slipped despite a generally solid report. Super Micro Computer (NASDAQ:SMCI) plunged after missing profit and revenue expectations. The speed of those moves spooked markets in Asia. Japan and South Korea each saw tech heavy bourses decline more than 2 percent on Wednesday, while European indexes were down about 0.5 percent earlier.
Earnings, big bets and crowding concerns
Market sentiment has been tested by a catalog of events this week. An earnings day flub from Palantir was notable because the stock had been an extreme outperformer and trades at a lofty multiple. Michael Burry, who gained fame by betting against the U.S. housing market in 2008, placed bearish bets on Nvidia (NASDAQ:NVDA) and Palantir according to a regulatory filing. That move added to unease about concentrated positions and crowded trades in AI related names.
Advanced Micro Devices and other chipmakers have also run hard this year. The recent pullback shows how quickly gains can reverse when the narrative around growth and multiples changes. Qualcomm (NASDAQ:QCOM) headlines the earnings calendar next. Retail heavyweight Costco (NASDAQ:COST) will provide a read on consumer behavior. Investors will parse those results to see whether the revenue and margin stories that supported lofty valuations still hold up.
Macro calendar and policy signals to watch
Data and policy will matter for the next session. ADP private payrolls for October will provide an early look at the jobs picture, a sorely needed reality check for Fed officials who have voiced disagreement over the policy path. The report comes as the U.S. faces a prolonged government shutdown that has limited some economic data flows. Investors will look for any sign that labor markets are cooling or holding up, since that will influence expectations for interest rates.
The Supreme Court begins hearings on the legality of portions of the president’s import tariffs today. That legal process could affect trade policy expectations. Meanwhile, central bank speakers include Bank of Canada Governor Tiff Macklem and Bank of England Deputy Governor Sarah Breeden. Their comments, together with national economic surveys, will shape bets on rate decisions in the near term.
Political developments and global spillovers
Tuesday’s elections produced a surprisingly positive showing for Democrats in a set of municipal and state races. Zohran Mamdani won the New York City mayoral contest and that outcome has already stirred debate about the citys competitiveness and its appeal to businesses. Investors are weighing the implications. Political results at the local level can change regulatory and fiscal expectations and may influence where companies choose to expand or locate operations.
On trade, China confirmed it will suspend some retaliatory tariffs on U.S. imports following recent high level talks, and it will lift duties on certain farm goods. Soybean imports, however, will still face a 13 percent tariff. In addition, Beijing issued guidance that state funded data center projects must use domestically made AI chips. Those moves could reshape supply chains for cloud and AI infrastructure and push more demand to local suppliers, which carries implications for both global vendors and emerging market producers.
Currencies, commodities and risk appetite
Markets outside equities also reflected the risk off tone. The dollar index nudged higher to its best level since May. The Korean won hit a seven month low as the KOSPI logged its worst day since early August before recouping some losses. Sterling recovered some ground after the UK finance minister signaled likely tax rises, which in turn has influenced expectations for Bank of England rate moves. The euro lagged despite surveys that showed the fastest expansion of the region’s economy in more than two years.
Commodities and crypto were not spared. Germany recorded its highest gas fired power generation since 2021, complicating efforts to rebuild natural gas stocks ahead of peak demand season. Bitcoin plunged and briefly dipped below key technical levels for the first time since June, which reflected the broader wave of risk aversion. These moves underline how equity volatility can propagate through other asset classes.
What comes next will depend on a mix of corporate results, macro updates and political developments. Traders will focus on earnings from heavyweights, the ADP payrolls print and any new signals from central bankers. Markets that have run hard this year will be watched for follow through. For now, investors appear to be reassessing crowded positions while weighing how domestic political outcomes and international trade shifts may change prospects for growth and corporate profits.
