Nasdaq-100 Enters Correction as Apple Slides on Margin Warning on Election Day

The Nasdaq-100 closed more than 10 percent below its all-time closing high on Monday, confirming that the tech-heavy index has entered a correction, as investors grew wary of heavy spending on artificial intelligence and limited evidence of returns so far, according to Reuters.

Apple and Palantir fall after earnings

Apple fell 3.9 percent in premarket trading after the company warned that the cost of memory chips would keep rising, which would put pressure on its gross margin in the holiday quarter. The company reported fiscal third-quarter revenue of $114.5 billion and net profit of $30.7 billion, both ahead of Wall Street expectations as measured by Visible Alpha, according to Investopedia.

Palantir fell 7.7 percent even after reporting revenue of $2.3 billion and net income of $1.1 billion, both ahead of Street expectations, and forecasting fourth-quarter revenue of $2.649 billion to $2.653 billion, above the Visible Alpha mean estimate of just under $2.5 billion. Some investors focused on reported third-quarter closed total contract value of $2.9 billion, down from the previous quarter.

Futures mixed as voters head to the polls

At 7:07 a.m. ET, Dow E-minis were down 489 points, or 0.94 percent, and S&P 500 E-minis were down 14.75 points, or 0.19 percent, while Nasdaq 100 E-minis were up 36.25 points, or 0.13 percent, according to Reuters.

Chip stocks offset some of the losses. Nvidia climbed 1.4 percent after falling for the previous four sessions, and Advanced Micro Devices gained 1.8 percent ahead of its quarterly earnings due after the bell. Wall Street expects AMD revenue of $13.1 billion and net income of $2.4 billion, according to Visible Alpha data cited by Investopedia.

American voters decide control of Congress on Tuesday, with polls and nonpartisan analysts favoring Democrats to take the House from Republicans, while control of the Senate remains uncertain, according to Reuters. Morgan Stanley analysts said in a note earlier this week that the elections should help remove a major market overhang, and that they believe the U.S. market correction that began in June is in its final innings. Societe Generale analysts said concerns around government spending and deficits have continued to build, contributing to market volatility.

Oil prices rose on Tuesday after falling in the previous session. The U.S. benchmark West Texas Intermediate crude was up more than 2 percent to just under $99 a barrel, as The Wall Street Journal reported that the U.S. was still conducting limited strikes on Iran, according to Investopedia. The 10-year Treasury yield was at 4.936 percent, up slightly from late Monday, and bitcoin was retreating to near $77,000. Drugmaker Pfizer rose 0.8 percent after lifting its annual revenue and profit forecast.

Reporting based on coverage by Reuters and Investopedia.