Stocks Slide at the Open as Credit Concerns Test AI-Fueled Optimism

U.S. stocks opened lower: the Dow Jones Industrial Average dropped about 319 points (-0.7%) to 47,017, the S&P 500 fell roughly 76 points (-1.1%), and the Russell 2000 slipped about 3.8 points (-1.5%). In commodities, COMEX Dec. gold traded near $3,982 (-0.8%), while Nymex Dec. crude changed hands around $60.18 (-1.4%). The market’s preoccupation was plain to see, a late-cycle credit backdrop rubbing against still-buoyant AI narratives. According to the Federal Reserve’s Senior Loan Officer Opinion Survey, banks tightened standards broadly. At the same time, demand for credit remained weak, with stress most visible in subprime autos and commercial real estate. The message isn’t crisis; it’s complexity.

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A new and potentially destabilizing fault line is emerging in the global financial system, with concerns centering on major insurers' aggressive embrace of private credit. Top officials, including UBS Chairman Colm Kelleher and the Bank for International Settlements (BIS), are sounding the alarm that insurers are using a practice described as "ratings arbitrage," a tactic reminiscent of the accounting complexities that masked systemic risk before the 2008 crisis. This maneuver injects dangerous opacity into what were once considered rock-solid balance sheets by artificially inflating the perceived safety of higher-yielding, harder-to-sell assets.

Though market liquidity remains robust, the BIS cautions that even a minor economic shock could expose significant valuation mismatches in these assets, potentially triggering a wave of forced selling that would deepen any broader market wobble. Already, investors have begun adjusting to this new reality; the cost to insure against a default by major players like Oracle has nearly doubled in recent weeks, a clear signal that the market is beginning to reprice the heavy capital demands of corporate growth against a backdrop of rising financial uncertainty.

Against that backdrop sits Palantir, where execution and expectations are colliding in real time. The company posted a record quarter $1.18 billion in revenue, 51% operating margin, and U.S. commercial growth of 121% to $397 million, while lifting guidance and pointing to 2025 GAAP profitability. Yet shares slipped in premarket trading as investors reassessed still-stretched multiples, even as BofA praised the platform and RBC warned on valuation. “These are not normal earnings,” Chief Executive Alex Karp said, describing a client relationship built on “a tribal understanding” that confers “a massive unfair advantage.”

However, Wedbush’s Daniel Ives planted a flag the day before earnings, lifting his Palantir price target to $230 on Nov. 2 and calling the subsequent report “another major step” as AIP adoption accelerates. His note also highlights partnerships with Snowflake and Nvidia and argues that federal AI spending under the Trump Administration, including Project Stargate, should bolster the government business. That sequencing matters today: when exuberance meets numbers, the market is deciding how much perfection it will pay for.

Offering a new view of the U.S. economy, Torsten Slok of Apollo points to a broad set of alternative labor indicators from ADP and Challenger to NFIB and state claims, showing a labor market that “is still doing well,” with no sudden rise in unemployment tied to cyclical forces or AI. If job fundamentals remain intact while credit edges fray, the playbook may be less crisis and more correction: a market that rewards proof and punishes promises as financing costs bite and risk premia normalize.