US Session: U.S. Markets Set to Open in the Red as AI Stocks Drag Markets Lower

Five key things investors need to know before the trading day begins:

1. Palantir’s “Popcorn Moment”

The tech earnings season continued yesterday with Palantir Technologies, which beat Wall Street expectations for both revenue and profit in the third quarter. The company also issued a better-than-expected forecast for the current quarter.

What you need to know:

• Palantir, which provides analytics tools to companies and government agencies, attributed its strong results primarily to artificial intelligence.
• The company expects $1.33 billion in revenue for the fourth quarter — an optimistic forecast despite the ongoing U.S. government shutdown, which could jeopardize some of its contracts. Analysts had expected $1.19 billion, according to LSEG.
• Shares initially rose after the report but later fell more than 7% in after-hours trading. Even so, Palantir stock has soared 25-fold over the past three years and 170% just this year.
• CEO Alex Karp used the earnings call to mock his critics, saying: “Grab your popcorn — they’re crying.” He also commented on the U.S. fentanyl crisis and the company’s controversial ICE software deal.
• In other tech news: Amazon shares closed at a record high after the company announced a $38 billion deal with OpenAI. Shares have jumped 14% in two days.
• Meanwhile, Uber fell 4% premarket, despite beating revenue expectations for the third quarter.

2. A Slice of Pizza?

Yum! Brands, the parent company of Pizza Hut, KFC, and Taco Bell, announced this morning that it will review strategic options for Pizza Hut — including a potential sale.

CEO Chris Turner said:

“Pizza Hut’s results show the need for additional action to unlock the brand’s full value — something that may be better achieved outside Yum! Brands.”

The company reported better-than-expected third-quarter revenue, but analysts noted that this is yet another example of the ‘K-shaped economy’ — where some businesses and consumers are thriving, while others remain stagnant post-pandemic.

3. A Packaged Deal

Kimberly-Clark announced yesterday that it will acquire Kenvue in a $48.7 billion deal, bringing together brands like Huggies, Kleenex, Band-Aid, and Neutrogena under one roof.

The deal — one of Wall Street’s largest this year — led to a 14% drop in Kimberly-Clark shares and a 12% rise for Kenvue.

If the name Kenvue sounds familiar, that’s because the Tylenol maker was in the spotlight last month when President Donald Trump made unfounded claims linking acetaminophen use during pregnancy to autism.
Kimberly-Clark CEO Mike Hsu told CNBC that Tylenol sales were “slightly impacted, but less than expected,” calling the brand “resilient.”

4. Funding the Aid

The Trump administration announced yesterday that it will use reserve funds to cover 50% of November’s SNAP (food assistance) payments.

Last Friday, a Rhode Island judge ruled that the government cannot halt payments during the ongoing government shutdown, which tonight will tie the record for the longest in history.

Meanwhile, in federal court in Boston, nearly twenty state attorneys general filed a lawsuit against the Trump administration over a new rule that restricts access to the Public Service Loan Forgiveness (PSLF) program. The new rule excludes organizations the Department of Education deems to be “engaged in illegal activities.”

5. A New Brew for Starbucks

To revive its weak sales in China, Starbucks announced the creation of a joint venture with Boyu Capital, under which the private equity firm will take control of the coffee chain’s Chinese operations.

The $4 billion deal is expected to close in the second quarter of fiscal 2026, with Boyu holding up to 60% and Starbucks 40%.

Starbucks’ China business, valued at over $13 billion, has faced challenges post-pandemic and growing competition from local brands like Luckin Coffee. The company has been forced to offer discounts to retain customers, which has reduced average tickets and profits.

Futures Point to a Negative Open

U.S. stock futures fell on Tuesday, pressured by declines in AI-related stocks like Palantir, as investors grow increasingly concerned about high valuations among leading tech firms.

S&P 500 futures were down 1.1%, Nasdaq 100 down 1.5%, and Dow Jones down 0.6% (−273 points).

Palantir lost 8% in premarket trading, despite beating Wall Street estimates for the third quarter and issuing an optimistic revenue forecast of $1.33 billion versus the $1.19 billion expected. Despite 63% revenue growth, the market reacted coolly due to uncertainty around 2026 and a lofty valuation — Palantir trades at over 200x projected earnings, with a current P/E of 700.

Other AI giants fell as well: Oracle −2%, AMD −2%+, and Nvidia and Amazon −2% each. The strong rally in these stocks has pushed the S&P 500’s forward P/E above 23, near its highest level since 2000.

Investors also reacted to warnings from Goldman Sachs and Morgan Stanley.
Goldman CEO David Solomon expects a 10–20% correction in the next 12–24 months, while Morgan Stanley’s Ted Pick added that “the market should welcome 10–15% pullbacks as healthy, not as signs of crisis.”

The S&P 500 and Nasdaq rose in the previous session, while the Dow Jones fell more than 200 points. The index remains about 1% below record highs, and over 300 stocks closed in the red, confirming weak market breadth and tech sector concentration.

Analyst Adam Crisafulli of Vital Knowledge commented that “a handful of tech giants are masking risks beneath the surface of the market.”

Additional pressure comes from the ongoing government shutdown, now matching the longest in U.S. history, and uncertainty over whether the Federal Reserve will cut rates for a third time at its December meeting.

Fed Governor Lisa Cook stated that the decision will depend on economic data and whether the impact of tariffs on inflation is fading.