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AI Stocks Drop on Calls for Slowdown 09/14 09:47
Artificial-intelligence stocks are sliding worldwide Monday after leaders of
the industry warned a slowdown is needed for safety. Another jump in oil
prices, meanwhile, sent the bond market to its latest pressure-raising
milestone as the yield on the 10-year Treasury hit 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 safety. Another
jump in oil prices, meanwhile, sent the bond market to its latest
pressure-raising milestone as the yield on the 10-year Treasury hit 5% for the
first time since 2023.
Despite all the downers, though, gains for many stocks outside AI helped
limit Wall Street's losses. The S&P 500 fell 0.6%, and more stocks rose within
the index than fell. The Nasdaq composite, which has many more tech stocks,
dropped a market-leading 0.9%, while the Dow Jones Industrial Average was down
159 points, or 0.3%, as of 10:20 a.m. Eastern time.
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 3.5% and was the heaviest weight on the market because of its
massive size.
SpaceX, which gets a chunk of its business from AI, fell 1.7% 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 on Saturday that
OpenAI would likely wait until next year for a sale of its stock on Wall
Street, potentially delaying a potential 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 America's edge over China
in a global competition and that winning would help address the risks from the
advancing technology.
He said on his social media network Monday that the only guardrail AI 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 this year on worries that AI-powered competitors
would undercut their businesses. Intuit, the company behind TurboTax and
QuickBooks, rose 4.8%. Autodesk, whose software helps designers, climbed 4.4%,
and Adobe added 2.8%.
Stocks in the oil industry also rose, including a 1.3% gain for ExxonMobil,
following another jump in crude prices.
The price for a barrel of Brent crude rose 4.2% to $109.05 as fighting in
the Middle East keeps squeezing the global flow of oil.
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 helped send 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, makes it more
expensive for U.S. households and businesses to borrow money, 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 have helped send longer-term Treasury yields to their highest
levels in years.
The yield on the 10-year Treasury rose to 5.00% from 4.96% late Friday and
just 3.97% before the war with Iran began in February.
The jump has already made it more expensive for U.S. households and
companies to borrow, including the highest average long-term mortgage rate in
more than 14 months.
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