S&P 500 Forecast: SPX falls after weak jobs data, AI valuation worries return

US futures                                         

Dow futures 0.23%, S&P futures -0.14%  & Nasdaq futures -0.36%

In Europe                                                                        

FTSE 0.85% & DAX 0.2%

• Stocks mixed after strong gains yesterday
• The US government shutdown could end this week
• Tech underperforms on valuation worries
• Oil rises as Russian sanctions are felt

Stocks slip as valuation worries return

US stocks are set to open lower on Tuesday as concerns over stretched tech valuations resurface and the market also watches developments surrounding the end of the longest US government shutdown in history.

Tech and AI shares had rebounded in the previous session, following last week's losses, on expectations that the government would reopen this week after a prolonged closure. The reopening would remove uncertainty while also bringing back the release of US economic data.

The Nasdaq jumped yesterday in its largest daily gain since late May, and the S&P 500 saw its biggest one-day percentage rise since mid-October.

However, the move turned sour today after ADP released its weekly update of preliminary payroll figures, which showed that private employers shed an average of 11,250 jobs per week over the four weeks ended October 25. This was significantly below the expected 14,250 increase.

The data adds to evidence of a weakening US labour market. However, the Fed reined in rate-cut bets at the October meeting and now sits at 67%.

Separately, Trump warned that the US faces an economic disaster if the Supreme Court rules against his use of emergency powers to impose sweeping tariffs. Trump said the US could be forced to pay back $3  trillion, which could be devastating for the country.

Corporate news       

Nvidia is falling in premarket trading after Japanese tech investment giant SoftBank announced it had sold its entire 32.1 million-share stake in the AI darling for $5.83 billion. SoftBank's CFO told investors the sale was part of a push to ensure asset monetisation and comes as SoftBank has sought to increase its position in OpenAI. Earlier this year, SoftBank led a funding round for OpenAI worth up to $40 billion at a valuation of $300 billion. Some doubts have begun to swirl surrounding the AI, especially the vast sums that several tech firms plan to spend on building out the technology.

Paramount has jumped 5% after reporting earnings. The firm plans more cost cuts and layoffs.

Xpeng's US-listed shares are rising 4.8% amid growing enthusiasm for the Chinese EV company’s humanoid technology, following the unveiling of its next-generation humanoid robot and its plans to launch very robotaxis next year.

S&P 500 forecast – technical analysis.

The S&P 500 trades within a rising channel. The price ran into resistance at the record high of 6920 before rebounding lower to 6630. The price has recovered from the spike lower, pushing above resistance at 6765, the October 9 high, to 6830. Momentum is slowing- the RSI bearish diversion could be a reason for caution.  Support is seen at 6670, the 50 SMA. It would take a fall below 6630 to create a lower low and open the door to 6500. Buyers will look to rise towards 6920 and fresh record highs. 

FX markets – USD falls, EUR/USD rises

The U.S. dollar is falling after weak ADP payroll data added to concerns about the health of the U.S. labor market, supporting expectations of a Fed rate cut.

EUR/USD is rising amid USD weakness and despite German economic sentiment deteriorating. The ZEW economic sentiment indicator fell to 38.5, down from 39.3 in October, defying expectations of a rise to 40. The fall comes as confidence in German economic policymaking deteriorates

GBP/USD is falling after data showed the UK labour market continued to weaken, raising expectations of a December BOE rate cut. UK Unemployment rose to 5%, its highest level since the pandemic, up from 4.8%; meanwhile, payroll figures fell by 32,000. Wage growth cooled to 4.6% from 4.7%. The market is pricing in an 80% probability of a December rate cut, up from 68% on Monday.

Oil inches higher as the impact of Russian sanctions is felt

Oil prices are rising for a third straight day. Holding above $60.00 a barrel as investors weigh up over supply concerns against the impact of the latest U.S. sanctions on Russian oil.

Leak oil declared a force measure at an Iraqi oil field that operates, marking the biggest fallout yet from the sanctions imposed by Trump last month. Oil exports have been restricted as a result of the sanctions, helping prop up oil prices amid ongoing concerns about an oil glut.

Earlier in the month, OPEC+ agreed to increase December output by 137,000 barrels per day but also decided to pause an increase in the first quarter of 2026. The oil market faces oversupply in the coming year, which is why prices may struggle to move much higher.

Separately, the market is also finding support from the potential end of the government shutdown this week. API data will be due out later today.