Here is Schwab's early look at the markets for Wednesday, November 5.

After yesterday's tech belly flop, investors get a look at some jobs data this morning. The October ADP employment report is due before the open and expected to show jobs growth of 26,000.

That's far better than the 32,000 decline in private sector employment ADP reported in September but not close to anything normally considered healthy growth. Though ADP's data seldom line up with official government numbers, it's all investors have to go on with D.C. still closed as of this recording.

Results from Advanced Micro Devices, a major chip firm, also grabbed attention early today following a slump in AI stocks Tuesday that helped pull down the entire market. AMD reported better-than-expected earnings and shared guidance that topped Wall Street's estimates, but the stock barely budged in after-market trading.

Tuesday's  weakness reflected uncertainty about AI strength despite Palantir's strong results and increased guidance released late Monday. Palantir's earnings followed a solid showing last week by five Magnificent Seven firms, which reinforced their commitment to AI spending but also raised concerns in some cases about their ability to keep doing so without hurting margin.

The knock on Palantir, analysts told financial media, is that it didn't give much clarity about the 2026 outlook. Investors also got unnerved by Bloomberg reporting that Meta Platforms sold $30 billion in bonds to help build AI datacenters. Though it's not uncommon for even the biggest companies to take on some leverage, the move by Meta reinforced ideas that it may be spending more than investors are comfortable seeing.  

"Markets have been moving higher on the same good news, including trade agreements, a dovish Fed, a strong economy, and the AI secular growth story for months now, and perhaps some mean reversion is needed," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research. "Palantir beat across the board on every metric, yet the stock fell."

This type of price action suggests that all the good news is priced in or that investors have gotten complacent around pulling future potential gains forward by bidding up the share price, sending valuations higher, Peterson added, noting that Palantir's forward price-to-sales ratio was over 80 heading into results.

"Market psychology comes into play here, because if these types of AI growth stocks are going to sell off on good news, how much are they going to go down on bad news?" Peterson said.

One technical headwind came from the Relative Strength Index for semiconductor stocks, which slid even as the sector advanced recently. This is called a negative divergence and is often seen as a bearish signal.

The Cboe Volatility Index, or VIX, which relaxed late last week and Monday from recent highs, forged gains on Tuesday and traded above 19 at times. Significantly, it didn't test levels above 20 seen on October's market pullback. More choppiness could be ahead. Starting next month and stretching all the way out to mid-2026, VIX futures trade in contango, well above the current level—at between 21 and 22.

The U.S. dollar index topped 100 for the first time since early August on Tuesday, highlighting an investor shift into perceived "safe havens" as the stock market dipped. Treasury yields fell, as well, but remain above last month's lows as uncertainty persists about the Federal Reserve's next move in the absence of government data. As of late Tuesday, chances of a rate cut next month were 70%, according to the CME FedWatch Tool.

Market breadth remains a concern, reinforcing worries of a top-heavy Wall Street that stands on less sturdy foundations. Less than 39% of S&P 500 stocks traded above their 50-day moving average as of late Tuesday while just 53% traded above their 200-day moving average. This might be another indication that the strong bullish uptrend could be losing steam.

Comments early Tuesday by Goldman Sachs CEO David Solomon and Morgan Stanley CEO Ted Pick played into the sentiment shift, as both suggested the chance of double-digit drawdowns in the equity markets.

"It's likely there will be a 10% to 20% drawdown in equity markets over the next 12 months," Solomon said at a Hong Kong event, Barron's reported. "That doesn't mean the general direction of capital flows is changing, it just means that things run and then they pull back so people can reassess."

About 100 S&P 500 companies report this week, including McDonald's before today's open and DoorDash, Qualcomm, and Arm Holdings after the close. The latter two will be watched closely for any hints on AI demand. Qualcomm is also a player in the cloud market dominated by Magnificent Seven firms.

Arista Networks became the latest tech firm to see shares dive double digits late Tuesday despite an earnings beat. Investors appeared disappointed by guidance, which was in line with expectations but failed to beat expectations.

Super Micro Computer joined Arista in the penalty box in initial post-market trading Tuesday as quarterly revenues fell short of consensus and earnings per share missed the average estimate. The company also guided for second-quarter EPS below consensus.

Today the Supreme Court begins hearing arguments challenging President Trump's import tariffs. Treasury Secretary Scott Bessent, who argues that the tariffs are critical for U.S. trade policy, will attend. Though it's unclear when the court might rule and the initial market impact when that happens is unclear, investors might want to follow the news for any hints of which way the justices might lean.

Major indexes fell and couldn't get up Tuesday, never drawing anything in the way of "dip buying" on the way down. The tech-heavy Nasdaq Composite suffered most, with a 2% decline, and the Russell 2000 small-cap index fell nearly 1.5%. This speaks to possible "risk-off" trading and could reflect nerves not just around AI valuations but also the lengthy U.S. shutdown and Tuesday's elections.

Checking sector performance Tuesday, the usual suspects that tend to do well on down days for the tech and chip market made an appearance, with health care, staples, and real estate among the top-four S&P 500 performers. Financials led all sectors Tuesday, helped by 5% gains for Apollo Global Management after a solid earnings report reflecting strong growth in its capital solutions business, which originates loans.

Info tech fell 2% on Tuesday, hurt by a nearly 4% drop for Nvidia and similar losses for semiconductors overall. Uber fell 5% despite an earnings beat, and Tesla dropped 5% amid worries about its CEO's pay package demands.

Looking at individual names, Palantir dropped nearly 9% Tuesday. The losses that came despite solid earnings and upbeat guidance may reflect lack of visibility into 2026, financial media reported. Palantir also trades at a very high valuation, likely making shares more sensitive to any lack of clarity in guidance.

Crypto shares got dragged by a plunge to four-month lows for bitcoin amid a general risk-off session. Bitcoin futures dropped below $100,000 for the first time since June 23, intraday, and are well off the all-time high close above $126,000 posted a month ago.

Norwegian Cruise Line Holdings sank 15% after revenue for the quarter missed Wall Street's expectations. Earnings per share topped consensus and the company raised guidance. Other cruise lines fell in sympathy.

A number of tech stocks popular with investors this year followed Palantir down including Intel, Micron, and CoreWeave. Apple bucked the downward trend, as it sometimes does, because on tough days investors are sometimes drawn to its hefty balance sheet. The same is likely true for Berkshire Hathaway, which rose 2.5% Tuesday.

Technically, the bullish uptrend remains intact on an intermediate-term basis, Peterson said, but near term could see some consolidation or mean reversion. But declining shares outpaced advancing ones by about a two-to-one ratio on the New York Stock Exchange Tuesday, Briefing.com noted. Key support might be at the 20-day moving average of 6,747, just below Tuesday's close.

The Dow Jones Industrial Average® ($DJI) plunged 251.44 points Tuesday (-0.53%) to 47,085.24; the S&P 500 index (SPX) lost 80.42 points (-1.17%) to 6,771.55, and the Nasdaq Composite® ($COMP) gave back 486.09 points (-2.04%) to 23,348.64.