Stocks Slip on AI Safety Worries, Rising Oil Prices: Stock Market Today
Stocks started the week on a negative note as several AI-related tech stocks sold off. Higher energy costs and Treasury yields didn't help.
Stocks fell Monday as fears that artificial intelligence has advanced too far, too fast escalated. Wall Street also kept a close eye on oil prices, which continued to climb ahead of this week's Federal Reserve meeting and are now up nearly 20% this month.
Over the weekend, Anthropic CEO Dario Amodei published an essay that cautions against the risks of AI, including allowing the technology to advance rapidly without guardrails in place. He specifically noted concerns over AI's ability to improve upon itself, as well as its capacity to conduct cybersecurity attacks without being instructed to do so.
"We must slow the pace at which we improve the capabilities of AI models," Amodei wrote. "Progress will still seem fast, and we must make wise use of the time we gain."
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Sam Altman, CEO of OpenAI, and Elon Musk, founder of xAI, which is now owned by SpaceX (SPCX, -2.0%), echoed Amodei's call to slow the pace of AI development.
While not everyone agrees — President Donald Trump posted on Truth Social that the "only control … AI needs is a STRONG AND SMART (High IQ) PRESIDENT" — the warnings from the tech CEOs weighed on several AI-related stocks today, including chipmakers Intel (INTC, -5.6%) and Nvidia (NVDA, -3.4%).
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But these AI safety warnings had a positive impact on a number of cybersecurity stocks, with CrowdStrike (CRWD, +13.9%) and Palo Alto Networks (PANW, +13.1%) among those closing higher.
As for the main indexes, the blue-chip Dow Jones Industrial Average fell 0.3% to 52,421, the broader S&P 500 shed 0.5% to 7,619, and the tech-heavy Nasdaq Composite slipped 0.6% to 26,186.
Oil keeps climbing, 10-year Treasury yield hits 5%
Sentiment also took a hit today as oil prices kept climbing. Following news that Saudi Arabia closed a key pipeline that bypasses the Strait of Hormuz after Iraqi drones damaged it, front-month West Texas Intermediate crude futures rose 1.3% to $101.39 per barrel.
Treasury yields were higher to start the week, too. The 2-year Treasury yield notched a two-year high in intraday trading before closing up 1.4 basis points at 4.658%. And the 10-year Treasury yield topped 5% for the first time since 2023, but finished the day just below here at 4.99%.
Rising oil prices and Treasury yields also lifted expectations that the Federal Reserve will hike rates at this week's policy meeting. According to CME Group FedWatch, futures traders are now pricing in a 93% chance the federal funds rate will be 25 basis points (0.25%) higher when the central bank concludes its September policy meeting Wednesday afternoon, up from 59% one week ago.
Follow along with all the latest news and updates on our September Fed meeting live blog.
Bank of America gets blasted on a Q3 revenue warning
Elsewhere on Wall Street, Bank of America (BAC) slid 5.1% after CEO Brian Moynihan said at the Barclays Annual Global Financial Services Conference that he expects the big bank's investment banking fees to be down more than 10% in the third quarter.
Moynihan also believes trading revenue will be flat year over year. This follows a strong second quarter for BAC, which saw investment banking fees jump 50% from the year prior and trading revenue soar 33%.
"If you look [at] this quarter, what we're seeing is the market generally in investment banking is down 10% or so in the Dealogic fees type of things," Moynihan explained. "We're not as well positioned in some of the businesses that … had more activity. So we'll be down probably a bit more than that."
Bank of America made headlines in August when regulatory filings revealed Warren Buffett's Berkshire Hathaway sold more than 30 million BAC shares in Q2. Still, the financial stock, which Buffett has owned since 2017, remains the fifth-largest holding in the Berkshire Hathaway equity portfolio.
GE Aerospace gets hit with a rare downgrade
GE Aerospace (GE) also closed lower Monday, shedding 1.9% after Melius Research analyst Scott Mikus downgraded the industrial stock to Hold from Buy.
While GE's aftermarket (parts and supplies) business has thrived in recent years as Boeing (BA, -0.09%) and Airbus (EADSY, -2.2%) made fewer new jets, aircraft retirements are expected to rise, says Mikus. And this will weigh on GE's top line.
"Great times don't last forever," Mikus adds.
A downgrade is relatively rare for top-rated GE. Of the 22 analysts following the stock who are tracked by S&P Global Market Intelligence, 19 say it's a Buy or Strong Buy, two have it at Hold and just one says Sell. This works out to a consensus Strong Buy recommendation.
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