US STOCKS-Wall Street futures dip as valuation concerns persist

By Twesha Dikshit and Purvi Agarwal

Nov 5 (Reuters) - U.S. stock index futures ticked lower on Wednesday, as investors retreated from AI-linked stocks for a second day on concerns over ballooning valuations and awaited economic data for signs on the health of the U.S. labor market.

The futures, however, pointed to less severe losses at market open compared with Tuesday when the Nasdaq .IXIC tumbled 2% to post its biggest one-day loss in nearly a month.

At 07:01 a.m. ET, Dow E-minis YMcv1 were down 28 points, or 0.06%, S&P 500 E-minis EScv1 were down 18.75 points, or 0.28%, and Nasdaq 100 E-minis NQcv1 were down 115.75 points, or 0.45%.

Wall Street's main indexes were trading at all-time highs in late October before warnings of a market pullback by U.S. bank CEOs and bearish views from hedge funds on the AI trade prompted concerns of a bubble.

"The problem with high valuations is that it's like blue sky. The moment there's one small black cloud, it is not a blue sky anymore. So if you have very high valuations, small news, shifts in sentiment can actually cause markets to come down a lot," said Herald Van der Linde, head of equity strategy for Asia Pacific at HSBC.

The benchmark S&P 500 .SPX has recently traded at 23.3 times forward earnings, the highest since the start of the century and well above its 20-year average of 16, according to LSEG data.

Corporate earnings were also on the radar. Shares of Advanced Micro Devices AMD.O, which have more than doubled this year, dipped 5.2% premarket despite an upbeat forecast.

Super Micro Computer SMCI.O, also an AI player, slumped 8.5% after the server maker posted quarterly profit and revenue below Wall Street estimates.

Other big chip companies Nvidia NVDA.O, Broadcom AVGO.O and Intel INTC.O also fell.

Health insurer Humana HUM.N and McDonald's MCD.N slipped 5.3% and 0.8%, respectively, after their third-quarter results.

There was little reaction in stocks after democratic socialist Zohran Mamdani was elected as mayor of New York City.

GOVT SHUTDOWN SETS RECORD

With the U.S. government shutdown becoming the longest in history, the spotlight will be on ADP National Employment numbers due later in the day to gauge the state of the labor market.

October employment figures are expected to show an addition of 28,000 jobs, compared with the prior month's decrease of 32,000 positions.

The data fog has led to debate among Federal Reserve officials over the monetary policy path and diverging opinions on how best to handle the gap.

Also on deck will be a Supreme Court hearing on the legality of U.S. President Donald Trump's tariffs.

China said it would suspend retaliatory tariffs on U.S. imports following last week's meeting between the countries' leaders, while 10% levies would be maintained with imports of U.S. soybeans facing a 13% rate.

Before the bell, Eli Lilly LLY.N shares gained 1.7%. The company's Danish rival Novo Nordisk lowered its fiscal-year profit and sales forecast.

Pinterest PINS.N shares dropped 18.3% after the image-sharing platform forecast fourth-quarter revenue below expectations.