Election results, McDonald's earnings, AI valuation fears and more in Morning Squawk

In the latest developments impacting investors, stocks experienced a downturn as worries about the valuation of artificial intelligence firms took center stage. Notably, shares of Palantir dropped by 8% despite the company posting a favorable earnings report earlier this week. On the political front, Democrats celebrated significant victories in key races across New York, New Jersey, and Virginia. Zohran Mamdani, a self-described democratic socialist, is projected to become New York City's next mayor after defeating former Governor Andrew Cuomo. Voter turnout was remarkable, exceeding 2 million—marking the highest engagement since 1969, according to the city's Board of Elections. In New Jersey, Mikie Sherrill is poised to take the governorship, facing off against Trump-endorsed Republican Jack Ciattarelli in a race that was closely watched as a potential indicator of GOP strength in the state. Virginia also saw historic wins, with Abigail Spanberger projected to become the state's first female governor and Jay Jones winning the attorney general race, despite not being favored going into the election. In corporate news, McDonald's reported third-quarter earnings that fell short of Wall Street expectations with revenues at $7.08 billion, slightly below the anticipated $7.1 billion. However, shares rose approximately 1% after the announcement, buoyed by a 3.6% growth in same-store sales globally and 2.4% in the U.S. CEO Chris Kempczinski highlighted the company's ability to achieve sustainable growth even amidst challenging market conditions. Conversely, shares of Cava saw a nearly 8% decline after the fast-casual chain lowered its full-year forecast for the second consecutive quarter. The ongoing wave of layoffs across corporate America continues to raise eyebrows, with companies like IBM, Amazon, and Meta announcing significant job cuts. While some attribute these layoffs to the rise of AI, experts suggest that many firms might be using AI as a convenient excuse for underlying issues or standard cost-cutting measures. The absence of reliable employment data due to a government shutdown adds to the uncertainty, igniting concerns that the job cuts could be more reflective of an economic slowdown rather than the impact of AI. Indeed's Job Posting Index revealed that job openings have plummeted to their lowest level in over four years, underscoring the current labor market's challenges. In entertainment, Netflix's hit film "KPop Demon Hunters" has not only captivated audiences but also significantly boosted the K-pop industry, generating an estimated $10 billion. The success of the film has led to considerable gains for major K-pop companies like HYBE and SM Entertainment, and its influence may extend to increased demand for Korean beauty products and food, potentially affecting political dynamics in China. Finally, amidst speculation about its future following Meta's $14.3 billion investment in Scale AI, CFO Dennis Cinelli emphasized the growth trajectory of Scale, dismissing any notions of the acquisition being merely an "acquihire." Stay tuned for more updates as these stories unfold, and keep an eye on the market movements that could impact your investments.