Losses for Big Tech pull Wall Street lower

Wall Street pointed toward losses before the opening bell as the same tech companies that drove a market rally to start the week sold off with doubts rising over the possibility of another rate cut from the U.S. Federal Reserve before the end of the year.

Futures for the S&P 500 slid 1% in premarket trading, while the futures for the Dow Jones industrials fell 0.6%. Nasdaq futures tumbled 1.4%.

Palantir Technologies lost some of its recent gains, falling 7% overnight even after its third-quarter earnings topped Wall Street targets. The analytic software company has benefitted from the recent AI frenzy, its shares rising 176% so far this year as of Monday's close.

Chipmaker Nvidia also reversed course Tuesday, falling 1.7% before the bell. Amazon, whose shares jumped Monday after announcing a $38 billion agreement with OpenAI, fell 1.3%.

Criticism has been rising that the broad U.S. market, and AI stocks in particular, have become too expensive and could be inflating into a dangerous bubble similar to the 2000 dot-com bust.

There is growing concern that the Federal Reserve might not cut interest rates again this year with inflation still above its 2% target. That would have an outsized impact on tech companies because they rely heavily on access to credit to fuel growth.

Federal Reserve Bank of Chicago President Austan Goolsbee said on Monday in a Yahoo Finance interview that, “I am nervous about the inflation side of the ledger, where you’ve seen inflation above the target for four and a half years, and it’s trending the wrong way.”

Fed Governor Lisa Cook said Monday that, "Every meeting, including December’s, is a live meeting.”

Getty Images slumped 8.2% after a judge mostly ruled against it in the first major copyright trial of the generative AI industry. Getty, which owns an extensive online library of images and video, had sued the artificial intelligence company Stability AI in a British court over intellectual property rights.

The case was among a wave of lawsuits filed by movie studios, authors and artists challenging tech companies’ use of their works to train AI chatbots.

Tesla tumbled 2.7% after Norway’s sovereign wealth fund, one of the electric car maker's biggest investors, said Tuesday that it will vote against a proposed compensation package that could pay CEO Elon Musk as much as $1 trillion over a decade.

There will be more than a dozen company proposals up for a vote Thursday during Tesla’s annual meeting, but none have generated more division than Musk’s potentially massive pay package.

Elsewhere, in Europe at midday France's CAC 40 lost 1.3% and Germany's DAX dipped 1.5%. Britain's FTSE 100 slid 0.8%.

In Asia, Japan's benchmark Nikkei 225 dipped 1.7% to finish at 51,497.20 following a national holiday on Monday.

"Japan market continues to pivot from mean reversion to momentum, with AI/semis driving gains through steep valuation rerating," said Shrikant Kale, strategist at Jefferies Hong Kong.

Australia's S&P/ASX 200 shed 0.9% to 8,813.70. South Korea's Kospi dipped 2.4% to 4,121.74, reversing after a rally took it to record highs in recent days.

Hong Kong's Hang Seng erased earlier gains to fall 0.8% to 25,952.40, while the Shanghai Composite lost 0.4% to 3,960.19.

In energy trading, U.S. benchmark crude fell 85 cents to $60.20 a barrel. Brent crude, the international standard, declined 79 cents to $64.10 a barrel.