The global stock rally faces headwinds as "Big Short" investor Michael Burry takes significant bearish positions against NVIDIA and Palantir, while several Wall Street executives warn of an impending market correction due to overvaluation.
As of writing, Dow futures fell 0.63%, S&P 500 futures dropped 0.99%, and Nasdaq futures declined 1.28%. European markets slid 1.5% across all sectors, with the UK's FTSE down nearly 0.7%, Germany's DAX falling 1.4%, France's CAC 40 losing 1.2%, and Italy's FTSE MIB retreating 1%. Asian markets also broadly declined, with tech stocks posting their worst performance since September.
S&P 500 futures fell 1.0% after the index eked out modest gains led by tech stocks. Nasdaq 100 futures dropped 1.3%, with Palantir down 6.9% pre-market. The dollar held near August highs as Fed officials sent mixed signals on rate policy. U.S. Treasuries rebounded, pushing the 10-year yield down 3 basis points to 4.09%. Gold stabilized while Bitcoin approached June lows.
"Big Short" investor Michael Burry's firm disclosed put options on 1 million NVIDIA shares and 5 million Palantir shares, representing 80% of its portfolio. This follows Burry's earlier warnings about the AI-driven market rally. Despite Palantir reporting Q3 revenue of $1.18 billion (up 63% YoY) and raising full-year guidance, its shares fell as investors sought clearer long-term growth visibility. The stock, up over 150% YTD, trades at 85x sales - the highest in the S&P 500.
Wall Street CEOs including Morgan Stanley's Ted Pick and Goldman Sachs' David Solomon warned at a Hong Kong summit that a 10%+ market correction within 12-24 months appears likely, though they framed this as healthy rather than signaling a bear market. The S&P 500's 35% rally since April, driven by AI-focused tech giants, has raised valuation concerns.
Fed policy uncertainty grew as officials diverged on economic risks, with Chicago Fed's Austan Goolsbee prioritizing inflation worries while Governor Lisa Cook emphasized labor market risks. Markets now price a 65% chance of December rate cuts, down from 94% last week. The U.S. government shutdown has suspended official economic data releases, leaving investors reliant on private surveys showing an eighth straight month of manufacturing contraction.
In corporate highlights: - Cryptocurrency stocks fell pre-market as Bitcoin hit two-week lows - Palantir dropped over 7% and NVIDIA fell nearly 2% on Burry's short bets - Beyond Meat slid 8% after delaying Q3 results - Tesla declined 2.3% as major shareholders oppose Musk's pay package - Pfizer gained 2% on better-than-expected Q3 revenue - Uber fell 5% after missing EBITDA estimates - Denny's surged 48% on privatization news - Super Micro Computer dipped 2.8% ahead of earnings - Baidu rose 3% as its Apollo Go service hit 250k weekly orders - TSMC fell 1.7% amid pricing speculation