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Financial Markets 09/14 15:23
NEW YORK (AP) -- Artificial-intelligence stocks slid 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 yield of the 10-year
Treasury to 5% for the bond market 's latest pressure-raising milestone.
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 0.5%. More stocks rose within the index
than fell.
The Dow Jones Industrial Average dropped 152 points, or 0.3%, and the Nasdaq
composite sank 0.6% 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 3.4% and was the heaviest weight on the market because of its
massive size.
SpaceX, which gets a chunk of its business from AI, fell 2% 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 the
company behind ChatGPT would likely wait until next year for a sale of its
stock on Wall Street. That would delay 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 his country's edge over
China in a global competition and that winning would help address the risks
from the advancing technology.
Even with 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 5.5%. Autodesk,
whose software helps designers, climbed 7.8%, and Adobe added 5.3%.
All told, the S&P 500 slipped 37.00 points to 7,619.98. The Dow Jones
Industrial Average dropped 152.09 to 54,421.20, and the Nasdaq composite fell
146.62 to 26,186.41.
Oil prices, meanwhile, continued to climb as fighting in the Middle East
keeps squeezing the global flow of crude. The price for a barrel of Brent crude
rose 1% to $105.68 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.
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 briefly 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 4.98% after 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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AP Business Writers Chan Ho-him and Michelle Chapman contributed to this
report.
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