U.S. stock futures extended losses in pre-market trading on Friday amid concerns over high valuations and weaker employment data.

As of the latest update, Dow futures fell 0.3%, S&P 500 futures declined 0.4%, and Nasdaq futures dropped 0.6%.

On Thursday, major AI-related stocks lost momentum. Nvidia, Advanced Micro Devices (AMD), Tesla, and Microsoft all saw significant declines, dragging down the broader market. Additionally, data showed U.S. corporate layoffs in October hit their highest level for the month in over two decades, making 2025 the worst year for job cuts since 2009—further exacerbating the market downturn.

Nvidia shares fell nearly 1% in pre-market trading, extending its weekly decline to 7%. Oracle, another AI leader, also dropped about 1% pre-market, on track for a 7% weekly loss. Palantir Technologies has slumped 12% this week, while Broadcom fell 4%, with both stocks continuing to slide in pre-market trading.

In Europe, the STOXX 600 index edged down 0.17% in early Friday trading.

Following Thursday’s sell-off—primarily concentrated in AI-driven tech giants—the Nasdaq has fallen 2.8% this week, marking its worst weekly performance since April if losses persist. However, the index remains up over 50% since then.

In China, the CSI 300 and Shanghai Composite indices both declined 0.3%.

Japanese stocks also faced pressure, with the Nikkei 225 dropping 1.2%, bringing its weekly loss to 4.1%—the steepest since April. South Korea’s KOSPI fell 1.8%, down 3.7% for the week, its worst performance since February.

Tech stocks led the declines, particularly chip and cable manufacturers. SoftBank Group slumped nearly 20% this week.

**AI Rally Faces Its Biggest Test** Investors are navigating a turbulent week that may pose the most significant challenge to the AI-driven bull market since April, as doubts emerge over whether the rally has gone too far. Meanwhile, the U.S. remains in its longest-ever government shutdown, limiting economic data releases and adding uncertainty to interest rate expectations.

The AI stock pullback lacks a clear trigger, but concerns over bubble risks and profitability are growing. Late last month, Meta (Facebook’s parent) plunged after announcing aggressive AI data center expansion plans.

Despite beating earnings expectations, Palantir Technologies saw its shares tumble.

Herald van der Linde, HSBC’s head of Asia-Pacific equity strategy, noted, 「Market shifts can be gradual. More investors may think, ‘I’ve made good profits—maybe it’s time to take some off the table.’ Then others follow, creating a self-reinforcing dynamic. That might be happening now.」

Michael Brown, senior research strategist at Pepperstone, said, 「There’s unease this week, but genuine dip-buying remains. Investors are looking past short-term volatility to solid fundamentals.」

As of Thursday, U.S. benchmark indices were down about 1.8% for the week. Notably, the sell-off lacks a clear catalyst. Traders expect choppy trading to continue but with limited downside, given strong corporate earnings and potential Fed easing.

Chris Verrone, partner and chief strategist at Strategas Securities, said, 「The momentum unwind reflects sentiment and short-term trading rather than a fundamental shift. We remain inclined to give the market the benefit of the doubt, especially with year-end oversold conditions favoring a rebound.」

**Fed Rate Cut Bets Rise** Bond markets rallied on safe-haven demand and weak U.S. jobs data. The 10-year Treasury yield fell 6.4 bps to 4.09% on Thursday and held steady Friday.

With official U.S. data frozen due to the shutdown, private surveys gained traction. Challenger, Gray & Christmas reported a surge in October layoffs, reinforcing expectations for Fed rate cuts.

The dollar index rose 0.2% to 99.845; the euro held at $1.1535. The yen, a haven currency, gained 0.3% this week.

Gold topped $4,000 on safe-haven bids but remained below its October 20 record high of $4,381.21.

Soybean prices extended losses amid scant signs of large Chinese purchases, despite Washington’s claim that Beijing pledged to buy 12 million tons by year-end.

**Fed’s Williams Signals Possible Balance Sheet Expansion** New York Fed President John Williams said the central bank may soon need to resume bond purchases to address liquidity needs after halting balance sheet runoff last week.

Williams stated, 「The next step in our balance sheet strategy is assessing when bank reserves transition from ‘ample’ to ‘ample enough.’ Once that happens, gradual asset purchases will begin.」 He added, 「Given recent repo market stress and other signs, I expect we’ll reach that point soon.」

However, he cautioned that determining the timing for injecting cash remains complex.

**Nomura: AI ‘Second Act’ Ahead, No Bubble Yet** Traditional industries will drive spending, says Japan’s largest tech fund, which argues AI stocks aren’t in a bubble and have further upside.

Yasuyuki Fukuda, CIO of Nomura’s Japan Information Electronics Equity Fund, said the AI market is 「just entering its second act」 and 「not in a bubble phase.」 He noted today’s tech landscape differs sharply from the dot-com bust, with investments led by cash-rich giants like Meta, Google, and Amazon, creating more sustainable infrastructure.

**JPMorgan: Buy the Dip** Despite growing AI sustainability concerns, JPMorgan sees a buying opportunity. The bank advises purchasing any year-end sell-offs, including this week’s tech-driven slump.

Analysts led by Andrew Tyler, JPMorgan’s global head of market intelligence, wrote, 「We’d buy dips into year-end,」 maintaining their bullish S&P 500 outlook and targeting a 「near-term」 breakout above 7,000—a 3% gain from current levels.

The bank cites strong U.S. growth, earnings, and fading headwinds as reasons for optimism.

**Citi Echoes Buy-the-Dip Call** Global equities have retreated from record highs amid 「AI bubble」 talk, but Citi strategist Drew Pettit argues the long-term AI narrative remains intact, creating dip-buying opportunities.

Pettit estimates the S&P 500’s fair value at ~6,600 based on discounted earnings but recommends maintaining exposure to both growth and cyclical sectors.

**Key Stocks in Focus** - Tesla rose over 2% pre-market as Musk’s $1 trillion pay package was approved. - Intel gained ~2.6% after Musk hinted at potential collaboration. - Lucid fell over 1% on weak Q3 results. - SanDisk surged 9% after beating revenue and margin forecasts, citing supply shortages through 2026. - IREN jumped 5% on 355% YoY revenue growth. - Block tumbled 14% after missing Q3 revenue and EPS estimates. - Monster Beverage rose 4% on strong earnings. - Metsera slid over 2% post-record highs as Novo Nordisk and Pfizer raised takeover bids.