(Reuters) -Nasdaq and S&P 500 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.

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

At 06:10 a.m. ET, Dow E-minis were down 43 points, or 0.09%, S&P 500 E-minis were down 25.5 points, or 0.37%, and Nasdaq 100 E-minis were down 149.5 points, or 0.58%

U.S. stocks 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 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.

Shares of Advanced Micro Devices, which have more than doubled this year, dipped 4.9% premarket. Super Micro Computer, also an AI player, slumped 9% after the server maker posted quarterly profit and revenue below Wall Street estimates.

Shares of other big chip companies Nvidia, Broadcom and Intel also fell.

The third-quarter earnings season is well underway and traders will keep an eye on big names reporting on Wednesday including Qualcomm, Humana and McDonald's.

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, after a lower court ruled the administration had overstepped authority by imposing levies under an emergency law.

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 shares gained 1.7%. The company's Danish rival Novo Nordisk lowered its fiscal-year profit and sales forecast.

Pinterest shares dropped 17.2% after the image-sharing platform forecast fourth-quarter revenue below expectations.