Valuations have been soaring in rarified air. The S&P 500 trades at roughly 23 times forward earnings-the loftiest multiple since the dotcom boom and well above the two-decade average of 16. 

Chipmakers - the darlings of the AI revolution - led the slide. AMD, which has more than doubled this year, fell over 5% after an earnings report that was perfectly fine but not spectacular. Super Micro Computer, another AI-fuelled favorite, plunged more than 8% on weaker-than-expected results. Nvidia, Broadcom, and Intel followed suit.

The pullback has been sharpened by warnings from big-bank chiefs and hedge funds who fear an AI bubble. More and more investors are drawing parallels between today's AI mania and the internet bubble of the late 1990s. The similarities are striking: heady valuations, breathless optimism, and a conviction that this time, it's different. The difference, of course, is that this time it might actually be.

Two decades ago, many of the hottest tech firms were little more than websites with grand promises and no profits. Today's AI champions-Nvidia, Microsoft, Alphabet-sit on solid balance sheets, hefty cash reserves, and real earnings. Their products are changing industries, not just advertising slogans. Yet the pattern of investor behavior is uncomfortably familiar: the faster the rise, the harder the fall when sentiment turns.

The risk isn't that AI will fade away: it won't. The risk is that its financial future has already been priced as if the technology has conquered the world before the world has even adjusted to it. 

In other news, one small piece of good news emerged from the data front. The ADP report showed that U.S. private employers added 42,000 jobs in October-well above the 30,000 economists had expected, and a relief after the previous month's contraction. It's hardly a hiring boom, but it suggests that the U.S. labour market remains resilient despite higher borrowing costs and political gridlock.

Still, it might not be enough to silence the debate inside the Federal Reserve. The central bank, having cut rates last week, now faces a delicate question of how soon-and how far-it should ease further. For investors, the message is mixed: the economy isn't collapsing, but neither is it roaring ahead. That ambiguity may be the least comforting outcome for markets addicted to certainty.

The U.S. government shutdown-now the longest in history-drags on, though there are faint signs of compromise in Congress. Lawmakers on both sides hint at optimism, though Washington optimism should always be consumed with salt.

Meanwhile, the Supreme Court is hearing arguments over whether President Donald Trump overstepped his powers when he slapped global tariffs on imports, citing emergency authority. Lower courts said he did. Prediction markets now give him less than a 40% chance of victory. Should he lose, it could reshape how future presidents wield economic power in the name of national security. Finally, the US president has some reason to be angry after the stunning victory of young Democrat Zohran Mamdani in the New York mayoral election, who represents just about everything Donald Trump despises.

The technology-heavy Asia-Pacific markets are struggling. Japan (-2.5%) and South Korea (-2.8%) are particularly affected. India (-0.6%), Hong Kong and Australia are flat. Europe is slightly bearish.

Today's economic highlights:

On today's agenda: China's Composite PMI; Germany's factory orders and Composite and Services PMI; France's industrial production and Composite and Services PMI; the Eurozone's Composite and Services PMI; the United Kingdom's Composite and Services PMI; in the United States, the ADP employment change, Composite and Services PMI, ISM Services Index, and DOE crude oil inventories. See the full calendar here.

  • Dollar index: 100,175
  • Gold:$3,967
  • Crude Oil (BRENT): $64.22 (WTI) $60.32
  • United States 10 years: 4.08%
  • BITCOIN: $102,588

In corporate news:

  • Johnson Controls reported Q4 sales up 3% but missed expectations, though EPS beat estimates on strong demand for data center cooling and decarbonization solutions.
  • Principles for Responsible Investment (PRI) is navigating internal divisions as key U.S. signatories like BlackRock and Vanguard exit ESG initiatives, while a new CEO prepares for COP30.
  • U.S. firms such as IBM, General Motors, and Amazon are ramping up job cuts across sectors in 2025 amid a tough economic climate and focus on cost-cutting.
  • Bank of America set a 3–5 year target of 16–18% ROTCE and expects EPS growth above 12%, while also forecasting revenue gains across consumer banking and global markets.
  • Iron Mountain beat Q3 profit estimates on strong storage rental and service revenue growth, and raised its dividend by 10%.
  • Zimmer Biomet met Q3 revenue expectations and beat on EPS, driven by U.S. growth and new product adoption despite regional headwinds.
  • High-flying AI stocks like Nvidia and Palantir tumbled amid profit-taking and valuation concerns, triggering a broader tech selloff in Asia and the U.S.
  • Dynatrace beat Q2 estimates and raised FY26 guidance on growing demand for AI-powered observability and large deal wins.
  • Chevron is nearing a final investment decision on expanding its Leviathan natural gas field in Israel, following a $35 billion export deal to Egypt.
  • Cencora beat Q4 revenue and EPS estimates and raised its dividend and long-term EPS guidance, supported by strength in healthcare solutions and acquisitions.
  • Elanco Animal Health beat Q3 revenue and profit expectations and raised its full-year forecast, fueled by new pet and farm animal health products.
  • Nvidia CEO Jensen Huang met with UK officials to discuss tech investment and policy, amid earlier announcements of a £2 billion UK commitment and export constraints on AI chips to China.
  • Microsoft and G42 announced a 200 MW data center expansion in the UAE as part of a $15 billion investment, enhancing Azure's AI and cloud infrastructure.
  • Bunge beat Q3 earnings expectations, driven by its Viterra acquisition and improved soybean and softseed processing margins.
  • Owens Corning missed Q3 sales and earnings estimates due to weak U.S. housing demand and took a $780 million impairment charge on its Doors business.
  • Turkish Airlines plans to finalize a major Boeing 737 MAX order and may switch to Airbus if engine talks with CFM stall, while also nearing completion of a stake in Air Europa.
  • Targa Resources beat Q3 adjusted EBITDA expectations with strong Permian volumes and announced a planned 25% dividend increase in 2026.
  • Humana beat Q3 EPS estimates on stronger premiums, maintained full-year EPS guidance, and forecasted a smaller-than-expected decline in Medicare Advantage membership.
  • Global private equity firms are eyeing a return to China due to attractive valuations and reduced U.S. exposure, according to speakers at a Hong Kong investment summit.
  • Honeywell Automation India posted a Q2 profit increase on strong industrial demand and order execution, driven by clean-tech incentives.
  • Pinterest shares dropped 18% after issuing a weak forecast amid ad competition from Meta, TikTok, and tariff-driven headwinds in North America.
  • Tesla shareholders face a vote on an $878 billion stock-based pay plan for Elon Musk, with the board warning he may leave if the package is rejected.
  • Global equity markets sold off as investors locked in AI profits, with tech stocks leading declines amid valuation concerns and macroeconomic uncertainty.
  • Qiagen announced a leadership change, raised full-year EPS guidance, and launched a $500 million synthetic share repurchase program.
  • Microsoft revealed a $60 billion AI investment plan, including $23 billion for its NScale initiative.
  • Arista Networks posted strong Q3 earnings but issued cautious forward guidance, leading to a drop in its share price.
  • Itau Unibanco reported an 11.3% increase in Q3 recurring profit, in line with analyst forecasts.
  • U.S. natural gas futures reached a seven-month high on record LNG exports and rising demand forecasts.

Analyst Recommendations:

  • Archer-Daniels-Midland Company: JP Morgan downgrades to underweight from neutral and reduces the target price from USD 61 to USD 59.
  • Fiserv, Inc.: BNP Paribas downgrades to neutral from outperform and reduces the target price from USD 200 to USD 62.
  • O'reilly Automotive, Inc: Raymond James upgrades to outperform from market perform with a target price of USD 105.
  • Qualys, Inc.: Piper Sandler & Co upgrades to neutral from underweight and raises the target price from USD 115 to USD 135.
  • Southern Company: Jefferies downgrades to hold from buy and reduces the target price from USD 114 to USD 103.
  • Super Micro Computer, Inc.: KGI Securities Co Ltd upgrades to outperform from neutral with a price target raised from USD 56 to USD 60.
  • The Ensign Group, Inc.: Oppenheimer upgrades to outperform from dropped coverage with a price target raised from USD 170 to USD 210.
  • The Mosaic Company: RBC Capital downgrades to sector perform from outperform with a target price of USD 30. .
  • Trex Company, Inc.: Deutsche Bank downgrades to hold from buy and reduces the target price from USD 92 to USD 40. 
  • Alphabet Inc.: KGI Securities Co Ltd maintains its outperform rating and raises the target price from USD 245 to USD 345.
  • Amd (Advanced Micro Devices): JP Morgan maintains its neutral recommendation and raises the target price from USD 180 to USD 270.
  • Apple Inc.: Daiwa Securities maintains its outperform recommendation and raises the target price from USD 230 to USD 300.
  • Astera Labs, Inc.: Susquehanna maintains its neutral recommendation and raises the target price from USD 125 to USD 155.
  • Caterpillar Inc.: Jefferies maintains its buy recommendation and raises the target price from USD 570 to USD 700.
  • Cava Group, Inc.: Baird maintains its outperform recommendation and reduces the target price from USD 95 to USD 72.
  • Dupont De Nemours: KeyBanc Capital Markets maintains its overweight recommendation and reduces the target price from USD 93 to USD 44.
  • Grab Holdings Limited: CLSA maintains its accumulate recommendation and raises the target price from USD 5.252 to USD 6.497.
  • Lumentum Holdings Inc.: B Riley Securities Inc. maintains its neutral recommendation and raises the target price from USD 83 to USD 147.
  • Norwegian Cruise Line Holdings Ltd.: BNP Paribas maintains its neutral recommendation and reduces the target price from USD 27 to USD 21.
  • Palantir.: CTBC Securities Investment Service maintains its buy recommendation and raises the target price from USD 142.30 to USD 235.
  • Paylocity Holding Corporation: Citi maintains its buy recommendation and reduces the target price from USD 221 to USD 175.
  • Pinterest, Inc.: Citi maintains its buy recommendation and reduces the target price from USD 50 to USD 38.
  • Sotera Health Company: Jefferies maintains its buy recommendation and raises the target price from USD 16 to USD 19.50.
  • Sterling Infrastructure, Inc.: D.A. Davidson maintains its buy recommendation and raises the target price from USD 355 to USD 460.
  • Ul Solutions Inc.: Raymond James maintains its outperform recommendation and raises the target price from USD 72 to USD 100.
  • Upstart Holdings, Inc.: JP Morgan maintains its overweight recommendation and reduces the target price from USD 88 to USD 65.
  • Waters Corporation: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 315 to USD 385.