Global stock markets declined on Tuesday as U.S. investors focus on earnings season. Fed Chairman Jerome Powell is scheduled to speak at an event hosted by the National Association for Business Economics at 00:20 Beijing time Wednesday morning.

As of press time, Dow futures fell 0.54%, S&P 500 futures dropped 0.85%, and Nasdaq futures declined 1.11%.

European stocks fell 0.7% after hitting new highs this month, reflecting weakness in Asian markets with technology stocks particularly hit. The MSCI Asia index fell for the third consecutive trading day, marking its longest losing streak since August.

S&P 500 futures dropped 0.7% and Nasdaq 100 futures fell 0.9%, suggesting Monday's rebound may not repeat, though a complete reversal is unlikely. China imposed restrictions on five U.S. companies related to one of South Korea's largest shipyards and threatened further retaliation.

Tuesday's market volatility marked the third consecutive day of sharp swings, with China-U.S. tensions again taking center stage. The S&P 500 has gained more than 30% since April, with initial trade concerns being replaced by artificial intelligence optimism and expectations of Fed rate cuts.

Bloomberg strategists noted: "With valuations stretched across nearly all market segments, the latest tensions give traders some reason to pull money off the table. Market complacency is also evident in volatility pricing, with the VIX at unusually low levels compared to the market turbulence this quarter could bring."

**Investors Focus on Earnings Season**

Investor attention has also turned to the unofficial start of earnings season, with JPMorgan Chase, Goldman Sachs, and Citigroup expected to release results before U.S. market open. During this period, investors will watch for guidance on everything from the durability of AI spending to tariff impacts.

Florian Ielpo, Head of Macro Research at Lombard Odier Investment Managers, stated: "Trade escalation is clearly unsettling markets. With valuations elevated, markets are already fragile, and we expect volatility to persist."

**AI Stock Bubble Concerns Intensify**

As artificial intelligence stocks surge, bubble concerns are heating up. In Bank of America's October survey, 54% of investors said tech stocks are overvalued, with concerns about global equities reaching record levels.

Nevertheless, some strategists suggest that while volatility is predictable at current valuation levels, the overall market environment remains favorable for stocks.

Mohit Kumar, Chief European Strategist at Jefferies International, wrote: "We continue to believe the macro backdrop favors risk assets, with economic resilience, rate cuts, and ample liquidity supporting markets. Trade wars and tariffs will indeed make headlines and create uncertainty, but we believe their ultimate impact is limited."

**Dollar Gains Support**

In bond markets, the U.S. 10-year Treasury yield stood at 4.02%, down 3 basis points. U.S. bond markets were closed Monday due to a public holiday.

The 2-year Treasury yield, more sensitive to Fed rate expectations, fell 4.6 basis points to 3.48%, down 12 basis points since Friday, marking the largest two-day decline since early August.

Danske Bank analysts suggested that further trade war escalation would increase the likelihood of earlier Fed rate cuts. Traders widely expect the Fed to cut rates further this month and next year to address labor market weakness.

In currency markets, the dollar spot index rose 0.3% to its highest level since August 1. The Australian dollar led declines, falling 1% to near two-month lows, while the British pound hit two-month lows following UK labor data releases.

ING analysts Chris Turner and Francesco Pesole indicated that the dollar's "repositioning" as a safe-haven currency and "some additional dollar upside momentum" could support the greenback in the near term.

The yen became the strongest performing major currency as Japan's opposition parties consider challenging the long-ruling Liberal Democratic Party. The Nikkei 225 fell as much as 3.2%, while short-term bond yields declined due to reduced prospects for near-term rate hikes.

Options market data shows increased bullish demand for the dollar, particularly against the pound, Australian dollar, and Canadian dollar, while showing opposite trading trends for the yen, which performed strongest among G10 currencies on Tuesday.

Traders are also watching Fed Chairman Jerome Powell's keynote speech Tuesday for clues about whether recent market pricing of Fed prospects is too dovish.

Meanwhile, cryptocurrencies continued declining after a historic liquidation wave. Bitcoin (the largest token by market cap) fell as much as 3.75% to around $111,500; Ethereum dropped 7.5%, falling below $4,000. Smaller, more volatile tokens fell more sharply, with the entire cryptocurrency market losing over $150 billion in market cap within 24 hours, according to CoinGecko data.

**Gold Breaks Above $4,100 Again**

In commodities, gold continued to hold near record highs amid sharp shifts in market sentiment, with expectations of more volatility spikes driven by profit-taking and bottom-fishing. This is what markets showed today. During European morning trading, gold fell from a high of $4,179 to $4,090 in just over an hour, then recovered, seemingly without obvious catalysts.

Han Tan, Chief Market Analyst at Nemo.money, stated: "Renewed global trade war concerns pushed gold prices through the psychological $4,100 level." He added: "Further advances toward the mid-$4,000 range may require a dovish surprise from the Fed at this month's FOMC meeting."

Silver pulled back after hitting record highs, currently cutting losses to 0.1%, trading at $51.95. Silver had earlier fallen to a low of $50.93 after touching a daily high of $53.62. It's supported by the same factors as gold plus tight spot market conditions.

Brent crude prices fell to $62 per barrel, continuing this year's decline of over 16%. The International Energy Agency (IEA) said record oil supply surpluses will be larger than previously expected.

**Powell's Speech Tonight May Reshape Global Risk Sentiment**

At 00:20 Beijing time Wednesday morning, Fed Chairman Powell will speak at an event hosted by the National Association for Business Economics, with the theme "Economic Outlook and Monetary Policy."

This speech comes amid severe global market volatility caused by renewed trade tensions and sharp corrections in digital asset markets.

Powell's remarks could influence market expectations for the pace of rate cuts and overall monetary policy, determining whether the current downward trend in cryptocurrency markets deepens or stabilizes.

**Goldman Sachs: U.S. Households to Become "Strongest Buyers" of Stocks in 2026**

Goldman Sachs said U.S. households are expected to become the largest buyers of U.S. stocks in 2026, driven by accelerating economic growth, declining unemployment, and slowing inflation. The firm predicts U.S. household net stock purchases will reach $520 billion in 2026, up 19% year-over-year; corporate net stock purchases are expected to be $410 billion, up 7% year-over-year.

Goldman analyst David Kostin noted that recovering M&A activity will further boost corporate stock demand, though continued IPO recovery will partially offset this growth.

Goldman's U.S. stock sentiment indicator recorded +0.3, turning positive for the first time since February, indicating various investor positions are currently at neutral levels. However, Kostin mentioned that among the 9 components in this indicator, only passive fund flows and retail margin debt show positive readings.

**U.S. Junk Bonds Post Worst Decline in Six Months**

The strong rally in U.S. junk bonds this year came to an abrupt halt last Friday, recording the largest single-day price decline in six months, with bond market risk premium indicators soaring to 304 basis points, near four-month highs.

Overall yields in the U.S. junk bond market rose to 6.99%, the highest in over two months.

Notably, beyond the six-month largest decline in overall U.S. junk bond prices, the U.S. credit market is experiencing a series of disturbing bond flash crashes.

Some cautious investors are even beginning to pray: "These are not preludes to a new subprime crisis."

**Focus Stocks**

Rare earth concept stocks rose broadly pre-market, with Critical Metals surging 38%, USA Rare Earth up over 11%, and MP Materials up over 7%.

Tesla fell 2.5% pre-market as the U.S. will investigate the company's nearly 2.9 million "Full Self-Driving" vehicles.

General Motors plunged 3% pre-market, expected to face $1.6 billion in costs due to electric vehicle production layout adjustments.

AMD rose over 1% pre-market as Oracle Cloud plans to deploy 50,000 AMD AI chips in the second half of next year.

Johnson & Johnson rose over 1% pre-market, raising full-year sales guidance.

Navitas Semiconductor surged over 24% pre-market on progress in 800VDC gallium nitride and silicon carbide power device development.

JPMorgan Chase rose over 1% pre-market, raising fiscal year net interest income guidance.

PayPal fell about 1% pre-market after Goldman Sachs downgraded it to "Sell."

Domino's Pizza rose over 2% pre-market on better-than-expected Q3 revenue.

Target fell 0.92% pre-market as D.A. Davidson lowered its price target to $108.

Albertsons rose over 6% pre-market, announcing a $750 million share buyback program.

Ericsson surged over 14% pre-market as Q3 net profit nearly tripled year-over-year, beating expectations.

BP fell 1.9% pre-market, warning that weak oil trading could pressure overall performance.