LIVE MARKETS-Brace for impact

Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com

BRACE FOR IMPACT

U.S. stock index futures were pointing to sharp declines at the open, with S&P EScv1, Nasdaq NQcv1 and Russell 2000 RTYcv1 E-minis all down more than 1% on Tuesday, after several record-setting weeks in a row for the major indexes as valuation concerns come to the front burner.

CEOs of Wall Street heavyweights Morgan Stanley MS.N and Goldman Sachs GS.N cautioned that equity markets could be heading toward a drawdown, underscoring growing concerns over sky-high valuations.

Several market analysts in recent weeks have noted markets have been primed for a pullback, given the extended run higher and lofty valuations. Over the weekend, Ed Yardeni, president and chief investment strategist at Yardeni Research in New York who last month put a 7,000 year-end price target on the S&P 500 .SPX, said in a note that while earnings have been bullish, "the signal from barometers of investor sentiment is bearish in the very short term."

Multiple valuation levels are also at levels not seen since the dot-com era, drawing comparisons to a potential market bubble. Several Federal Reserve officials, including Chair Jerome Powell have also signalled a rate cut at the central bank's December meeting may not be written in stone while they grapple with a lack of data due to the ongoing government shutdown.

On the earnings front, Palantir PLTR.O, which has a forward PE of nearly 250, slumped more than 8% before the opening bell even as it reported solid quarterly earnings and a strong revenue forecast.

(Chuck Mikolajczak)

EARLIER ON LIVE MARKETS:

HERE’S WHY BAILEY COULD PUSH THE BOE TOWARDS A CUT CLICK HERE

STOXX AT 2-WEEK LOWS, VOLATILITY PICKS UP CLICK HERE

BEFORE THE BELL: BIG TECH DOWN, EUROPE AND WALL ST TOO CLICK HERE

STOCKS SLIDE FROM RECORD HIGHS AS CAUTION REIGNS CLICK HERE