Wall Street falls as AI warnings hit tech shares

Wall Street stocks fell on Monday as artificial intelligence-linked technology shares weakened after leading AI executives called for a slowdown in development, while oil prices and US bond yields also rose.

The S&P 500 closed down 0.5%, the Nasdaq lost 0.6% and the Dow fell 0.3%. Shares including Nvidia, AMD and CoreWeave contributed to early weakness, though losses eased later in the session.

Anthropic chief executive Dario Amodei called on Saturday for a coordinated slowdown in AI development to better understand risks, a position backed by other industry figures. President Donald Trump rejected fears that artificial intelligence could wipe out humanity as a hoax and said the United States needed to win “a technological race” against China.

Adam Sarhan of 50 Park Investments said the statement from AI leaders was worrying because the AI trade had been an engine of the economy and stock market in recent years. Patrick Munnelly, a market strategist at Tickmill Group, said investors were reassessing the speed, scale and monetisation timeline of AI-sector capital spending.

Oil prices also rose after Saudi Arabia closed a key pipeline amid the Middle East war. Brent North Sea crude earlier passed $109 a barrel before finishing up about 1.0% at $105.68. West Texas Intermediate rose 1.3% to $101.39.

A note from Briefing.com attributed some calming in oil markets to “geopolitical optimism” after Trump said Iran wanted to reach an agreement quickly and that the United States was open to talks.

US bond yields also eased from earlier highs. The 10-year Treasury yield topped 5% early in the day for the first time since October 2023 before pulling back.

Analysts widely expect the Federal Reserve to raise interest rates because US inflation remains above the central bank's 2% target. Forex.com analyst Fawad Razaqzada said anything else would be a “massive” surprise, while Pepperstone analyst Chris Weston said markets saw a 92% probability of a rate increase and assumed 50 basis points of tightening by year-end.