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AI Stocks Drop on Calls for Slowdown 09/14 12:46
Artificial-intelligence stocks are sliding worldwide Monday after leaders of
the industry warned a slowdown is needed for the safety of humanity. Another
jump in oil prices, meanwhile, briefly sent the bond market to its latest
pressure-raising milestone as the yield on the 10-year Treasury touched 5% for
the first time since 2023.
NEW YORK (AP) -- Artificial-intelligence stocks are sliding worldwide Monday
after leaders of the industry warned a slowdown is needed for the safety of
humanity. Another jump in oil prices, meanwhile, briefly sent the bond market
to its latest pressure-raising milestone as the yield on the 10-year Treasury
touched 5% for the first time since 2023.
Despite all the downers for Wall Street, gains for many stocks outside AI
helped limit the market's losses. So did a midday tempering of oil prices, and
the S&P 500 fell a relatively modest 0.2% as more stocks rose within the index
than fell.
The Dow Jones Industrial Average was down 16 points, or less than 0.1%, as
of 1:06 p.m. Eastern time, and the Nasdaq composite was 0.2% lower after
clawing back most of an early loss of 1.3%.
AI stocks have been under pressure a while because of worries their prices
shot too high in the frenzy around the technology. The concerns jumped to
another level over the weekend after one of the industry's leading voices,
Anthropic CEO Dario Amodei, called for a deliberate and global slowdown in the
development of AI.
He cited safety issues, including the risk that AI becomes capable of
leading a swarm of agents that could take over the entire internet within six
to 12 months.
Nvidia, whose profits have soared because its chips are helping to train AI
models, sank 2.8% and was the heaviest weight on the market because of its
massive size.
SpaceX, which gets a chunk of its business from AI, rose 0.5% after Elon
Musk said over the weekend that he agrees with Amodei. Softbank Group, the
Japanese giant that is a major investor of OpenAI, lost 10.7% in Tokyo after
OpenAI's Sam Altman likewise supported the concept of a slowdown.
Altman also said in an interview with Fortune published Saturday that OpenAI
would likely wait until next year for a sale of its stock on Wall Street,
potentially delaying a gusher of cash for Softbank and other early investors in
OpenAI.
In South Korea, the Kospi index dropped 3.3% due to losses for its two most
influential stocks, Samsung Electronics and SK Hynix.
President Donald Trump played down the need for his administration to check
the development of AI, saying he worried about ceding his country's edge over
China in a global competition and that winning would help address the risks
from the advancing technology.
Even with so many voices inside and outside the AI industry calling for a
slowdown to protect humanity, Trump said on his social media network Monday
that the only guardrail it needs "is a STRONG AND SMART (High IQ!) PRESIDENT,
and the U.S.A. has that, in spades!"
Helping to limit Wall Street's losses on Monday were several software
companies that tumbled earlier on worries AI-powered competitors would undercut
their businesses.
Intuit, the company behind TurboTax and QuickBooks, rose 4.8%. Autodesk,
whose software helps designers, climbed 7.8%, and Adobe added 4.6%.
Oil prices, meanwhile, continued to climb as fighting in the Middle East
keeps squeezing the global flow of oil. The price for a barrel of Brent crude
rose 0.8 % to $105.45 after getting near $110 in the morning.
An important Saudi oil pipeline will mostly be out of service for weeks
following an attack last week, two regional officials told The Associated
Press. The pipeline offered a way for Saudi Arabia to shift exports to the Red
Sea and avoid the Persian Gulf's Strait of Hormuz, where Iranian attacks have
stifled the movement of oil tankers.
Brent has jumped from less than $72 in early July as doubts rise that the
United States and Iran can come to an agreement that would allow oil tankers to
freely exit the Persian Gulf through the strait again.
While the prospect of a de-escalation of war in Iran may have dimmed, ING
commodities strategists Warren Patterson and Ewa Manthey wrote in a commentary
on Monday that the situation is still fluid and "sizable" volumes of oil have
still been moving through the strait.
So far, the jump in oil prices has sent the average cost of a gallon of
regular gasoline across the country to nearly $4.32 from $4.08 a month ago and
$3.18 a year ago, according to AAA.
Such upward pressure on inflation has much of Wall Street expecting the
Federal Reserve will hike its main interest rate on Wednesday at the end of its
next meeting.
That's the traditional way the Fed tries to rein in high inflation. Such a
move then filters out through the rest of the bond market, slows the overall
economy and undercuts prices for investments. That hopefully would remove some
of inflation's fuel, though Trump has been lobbying for lower interest rates
instead of higher.
Besides high inflation, worries about rising debt for the U.S. and other
governments and other concerns have sent longer-term Treasury yields to their
highest levels in years.
The yield on the 10-year Treasury breached the 5.00% level during the
morning for the first time in nearly three years. That's up from 4.96% late
Friday and just 3.97% before the war with Iran began in February.
But the 10-year yield later pulled back to 4.95% as oil prices came off
their highs for the day.
The 10-year yield has not consistently remained above 5% since the turn of
the millennium, and its jump has already made it more expensive for U.S.
households and companies to borrow. That includes the highest average long-term
mortgage rate in more than 14 months.
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