FILE PHOTO: FILE PHOTO: A view shows the New York Stock Exchange (NYSE) Wall Street entrance in New York City, U.S., April 7, 2025. REUTERS/Kylie Cooper/File Photo

By Mike Dolan

-What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

A rare shakeout in Big Tech and chip stocks on Tuesday rippled around world bourses overnight. The fact that it came with few triggers other than growing unease at sky-high valuations left investors wondering if a more prolonged pullback is in store.

The backdrop to Wall Street's worst day in almost a month, which saw both the S&P500 and Nasdaq shed more than 1%, was a surprisingly positive showing for Democrats in local mayoral and state governor elections and today's start to the Supreme Court hearings on the legality of President Donald Trump's tariffs.

But neither was directly responsible for the wobble in the market that was unnerved by predictions of an inevitable correction and an earnings-day flub from AI and defense outlier Palantir - a stock that's doubled again this year in the tech frenzy and is trading about 230 times forward earnings.

"Big Short" investor Michael Burry, known for his successful bets against the U.S. housing market in 2008, has now placed bearish bets on Nvidia and Palantir, according to a regulatory filing on Monday.

Much like Palantir's 8% swoon the previous night, Advanced Micro Devices - whose stock price has also doubled this year - seemed to deliver a decent set of results after Tuesday's bell but the market reaction saw its shares drop 3% out of hours.

Another AI darling, Super Micro Computer, was less of a puzzle as its shares plunged 9% on profit and revenue misses.

Qualcomm tops the earnings diary later, with Costco eyed for an update on retail activity.

And there has been no bounce in U.S. stock index futures overnight, with tech-heavy bourses in Japan and South Korea both losing more than 2% each on Wednesday and European indexes down about 0.5% earlier.

Eyes will be on ADP's take on U.S. private sector payrolls for last month later on Wednesday to give a reality check on some hesitation among Federal Reserve officials about further policy easing.

U.S. Treasury yields have clawed back overnight declines ahead of that release, a rare glimpse of the jobs market in the data outage that's accompanying what's now the longest government shutdown on record. Tentative moves to end the hiatus this week saw no breakthrough.

The dollar index kept nudging higher, hitting its best level since May. The Korean won hit its lowest in seven months as the KOSPI stock index logged its worst day since August 1, even though it recouped some of its worst losses of more than 5% at one point.

Caught up in the wave of risk aversion and tech selling, Bitcoin plunged too and struggled to regain a toehold above $100,000 on Wednesday after dipping below that level briefly for the first time since June.

Elsewhere, China stocks outperformed as the Chinese government issued guidance requiring new data center projects that have received any state funds to only use domestically-made artificial intelligence chips.

Sterling recovered some ground after the UK finance minister Rachel Reeves on Tuesday flagged likely tax rises later this month - something that's buoyed bets on another Bank of England interest rate cut as soon as Thursday.

The euro was on the back foot despite European business surveys showing the fastest expansion of the region's economy in October in more than two years.

The latest U.S. election results, meantime, leave some investors mulling next year's more impactful midterm congressional poll. While betting markets such as Polymarket still see a Democrat House majority and a Republican Senate as the most likely outcome in a year's time, the chances of a Democrat sweep of both chambers jumped 10 points to 35% overnight.

Today's Market Minute

* Democrats swept a trio of races on Tuesday in the firstmajor elections since Donald Trump regained the presidency,elevating a new generation of leaders and giving the beleagueredparty a shot of momentum ahead of next year's congressionalelections. * Wall Street braced for change with the election ofdemocratic socialist Zohran Mamdani as mayor of New York City onTuesday, an outcome set to reverberate in the heart of globalcapitalism as financiers worry about the city's competitivenessand business appeal. * China will suspend retaliatory tariffs on U.S. importsfollowing last week's meeting of their two leaders, includinglifting duties on farm goods, Beijing confirmed on Wednesday,but imports of U.S. soybeans will still face a 13% tariff. * Disagreement among the Federal Reserve's policymakingcommittee is deepening as the fog of economic uncertaintythickens, putting Chair Jerome Powell's consensus-buildingskills to the ultimate test, writes ROI markets columnist JamieMcGeever. * Germany's highest gas-fired power generation levels since2021 are scuppering regional efforts to replenish natural gasstockpiles ahead of the peak season for gas-fired power demand.Read the latest from ROI global energy transition columnistGavin Maguire.

Chart of the day

With investors' minds shifting back to electoral math ahead of next year's U.S. midterm elections, voters' number one concern remains the cost of living.

Today's events to watch

* U.S. October ADP private sector payrolls (8:15 AM EDT) ISM October service sector survey (10:00 AM EDT)

* New York Federal Reserve releases Q3 Household Debt and Credit Report

* U.S. Supreme Court hears arguments on the legality of much of President Trump's import tariffs

* Bank of Canada Governor Tiff Macklem speaks in parliament; Bank of England Deputy Governor Sarah Breeden speaks

* U.S. corporate earnings: Qualcomm, Costco, MetLife, Albemarle, Ameren, Robinhood, Paycom, Amcor, Emerson Electric, Atmos Energy, Devon Energy, Texas Pacific, Cencora, Targa, Zimmer Biomet, Humana, Bio-Techne, Bunge, Johnson Controls, Allstate, STERIS, Fortinet, DoorDash, Corpay, Fair Isaac, Host Hotels, CF Industries, APA, PTC, TKO, PPL, Applovin, Charles River, Iron Mountain, Trimble,

* French President Emmanuel Macron visits Brazil and Mexico

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Mike Dolan; Editing by Ros Russell)