Stocks Fall as Palantir Dips, Raising AI Worries
Published as of: November 4, 2025, 9:13 a.m. ET
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Major index values are as of Monday's close; others are as of 8:55 a.m. ET.
(Tuesday market open) Wall Street suffered sharp early losses despite solid results and guidance from data analytics firm Palantir (PLTR), reinforcing the high bar investors have set for success. Pressure on Palantir puts this afternoon's results from Advanced Micro Devices (AMD) in the spotlight as fears resurface about the AI rally possibly losing steam. Bearish talk from executives at two major U.S. banks cast a shadow, as well.
Lack of clarity on the economic picture didn't help, either. With D.C.'s shutdown likely ruling out most of this week's scheduled jobs data, tomorrow's ADP employment report before the bell could provide insight into hiring trends after a dip of 32,000 in September that reinforced fears of a slowing labor market. Analysts expect a slight increase to around 26,000, according to Briefing.com, but that's not historically large and ADP doesn't typically correlate with official government data.
Yesterday, the S&P 500 index finished marginally higher in tepid trading, unable to find much traction for the third straight session. At one point, declining shares led advancers by a two-to-one margin, though the index was slightly higher thanks to mega-cap gains. Only four S&P 500 sectors climbed, led by consumer discretionary and info tech, and for the fourth session in the last five, more S&P 500 stocks fell than gained.
Three things to watch
- Chip earnings in focus: Today's highlight comes after the close when Advanced Micro Devices reports. It could give fresh clues on chip demand and possibly provide insight into trade with China after last week's deal. The deal disappointed some investors because it didn't spell out major concessions by either side on chips, and President Trump said over the weekend that Nvidia's (NVDA) most advanced chips won't be sold in China. In today's earnings call, AMD executives likely will be asked for more detail on exports to China and whether that's a market they expect near-term revenue from. The last time AMD reported, shares fell on an earnings miss. At the time, the company blamed a decline in AI business revenue due to the elimination of sales of its M1308 chip to China. That's a chip AMD designed for that market. Another element to watch today is data center business growth, which at 14% in the prior quarter appeared to disappoint some investors. The mega caps that reported last week touted very strong cloud sales, possibly a positive sign for AMD, which sees data center chips as its main growth driver. Given today's slide in Palantir after strong earnings, any disappointment in AMD's results could be scrutinized and perhaps put more pressure on the overall market. But strong earnings and guidance could bring dip buying.
- Earnings results reinforce tech outperformance: Tech stocks don't just dominate the rally, they also power third quarter earnings results. Info tech earnings growth is seen at 26.5%, according to FactSet, followed by utilities at 21.2%. Utilities, like info tech, reflect AI demand, as many firms like Constellation Energy (CEG)—which reports Friday—draw strength from that area. But five S&P sectors have earnings growth of less than 3% in the third quarter, including industrials and communication services. Strong earnings this week from companies like McDonald's (MCD), Shopify (SHOP), and Pfizer (PFE) might help ease concentration worries. And big-box retail earnings later this month could also have an impact if they show consumer strength. But it likely won't be enough to move the needle much from an overall third quarter standpoint. "It's a k-shaped market over the past month," said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research. He notes that the Magnificent Seven are up 5.4% during that period and the equal-weighted S&P 500 index (SPXEW)—which weighs all components equally rather than by market capitalization—is down 2.1%.
- Bank executives suggest weakness ahead: Breadth is increasingly narrow, with less than 38% of S&P 500 stocks above their 50-day moving average, another indication that the extended bull run could face headwinds. Comments overnight by Goldman Sachs (GS) CEO David Solomon and Morgan Stanley (MS) CEO Ted Pick played into the sentiment shift, as both suggested the chance of double-digit drawdowns in the equity markets. "It's likely there will be a 10% to 20% drawdown in equity markets over the next 12 months," Solomon said at a Hong Kong event, Barron's reported. "That doesn't mean the general direction of capital flows is changing, it just means that things run and then they pull back so people can reassess."
On the move
- Palantir (PLTR) dropped more than 6% before the open. Earnings and revenue late Monday beat Wall Street's average estimates. Fourth-quarter revenue guidance also topped consensus. U.S. business growth climbed 77% year over year, the company said, raising expected fiscal 2025 revenue guidance and citing strength in AI. Today's early losses may reflect lack of visibility into 2026, financial media reported. Palantir also trades at a very high valuation, likely making shares more sensitive to any lack of clarity in guidance.
- Advanced Micro Devices slipped nearly 3% ahead of its earnings report. AMD guided for $8.7 billion in revenue, and guidance didn't include any revenue from sales of the M1308 chip in China.
- Nvidia lost 2% in the early going, hurt by a general drawdown in the AI sector. It remains not far below recent record highs.
- Uber (UBER) fell more than 4% after reporting earnings that beat analysts' expectations. Revenue also topped consensus, and so did gross bookings.
- Tesla (TSLA) dropped 2.6% ahead of the open, hurt by general risk-off sentiment and news that Norway's sovereign wealth fund voted against a pay package for Tesla CEO Elon Musk.
- Pfizer (PFE) fell more than 1% despite beating analysts' earnings expectations and raising guidance.
- Eli Lilly (LLY) kept ploughing higher Monday following last week's solid earnings report. Shares climbed another 4% despite a lack of fresh news and carved six-month highs.
- Spotify (SPOT) rose 2.5% ahead of the open after topping Wall Street's earnings expectations. Guidance was mixed, with fourth quarter revenue expectations slightly below consensus, Yahoo Finance reported.
- Norwegian Cruise Line Holdings (NCLH) sank 9% in early trading after revenue for the quarter missed Wall Street's expectations. Earnings per share topped consensus and the company raised guidance.
- Amazon (AMZN) rose 4% Monday after announcing a $38 billion deal for Amazon Web Services to provide infrastructure for OpenAI's AI workloads. That was in addition to its nearly double-digit increase Friday following strong earnings. Shares of Amazon are now at all-time highs, but fell 1.5% this morning.
- Bitcoin (/BTC) tumbled 2.5% this morning and futures are testing key support near the 200-day moving average of $104,315 as risk-off sentiment grips the market. A previous test of that area on October 17 found buyers. Shares of stocks linked to crypto, including Coinbase (COIN) and Strategy (MSTR) fell around 3% in the early going.
- The Cboe Volatility Index (VIX) climbed 11% to above 19 early on. More choppiness could be ahead. Starting next month and stretching all the way out to mid-2026, VIX futures trade in contango, well above the current level—at between 21 and 22.
- The U.S. dollar index ($DXY) topped 100 for the first time since early August this morning, highlighting an investor shift into perceived "safe havens" as the stock market dipped. Treasury yields fell ahead of a speech by Fed Vice Chair for Supervision Michelle Bowman.
More insights from Schwab
Economic spark ahead for Germany? Despite announcing a massive stimulus program in early 2025, fiscal spending and economic growth in Germany have disappointed. However, the economic boost to Germany and Europe has probably been delayed, not denied, argued Michelle Gibley, director of international research at the Schwab Center for Financial Research, in her latest analysis. "Germany's defense and infrastructure spending super cycle has just begun," Gibley wrote.
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Chart of the day
Data sources: S&P Dow Jones Indices. Chart source: thinkorswim® platform.
Past performance is no guarantee of future results.
For illustrative purposes only.
Though the S&P 500 index (SPX—candlesticks) has steadily risen over the last six months, and the Relative Strength Index (RSI) of just below 63 (bottom chart) remains in bullish territory, the ADX (middle chart), or Average Directional Index, shows that the market's trend is losing steam from back in July. The ADX, which provides information on the strength of a trend, is now below 18, well under peaks of above 35 during the summer. Generally, anything under 25 indicates that the move is slowing a bit, possibly due to consolidation.
The week ahead
Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.
November 5: October ADP employment, October ISM Services PMI®, and expected earnings from McDonald's (MCD), Novo Nordisk (NVO), AppLovin (APP), Qualcomm (QCOM), Arm Holdings (ARM), and DoorDash (DASH).
November 6: Challenger October job cuts and expected earnings from AstraZeneca (AZN), ConocoPhillips (COP), Cummins (CMI), Airbnb (ABNB), and Datadog (DDOG).
November 7: Preliminary November University of Michigan Consumer Sentiment and expected earnings from Constellation Energy (CEG), Duke Energy (DUK), and Enbridge (ENB).
November 10: Expected earnings from Tyson Foods (TSN), CoreWeave (CRWV), and Occidental Petroleum (OXY).
November 11: Expected earnings from Beyond Meat (BYND).
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