AI warnings and interest rate fears weigh on Wall Street

AI companies' warnings about the dangers of their products are causing uncertainty on Wall Street. This is particularly bad for chip manufacturers. In addition, nervousness is increasing before the Fed's interest rate meeting.

Warnings about the dangers of artificial intelligence and rising bond yields caused Wall Street to suffer losses on Monday. The US standard value index Dow Jones lost 0.3 percent to 52,421 points. The technology-heavy Nasdaq fell 0.6 percent to 26,186 points and the broad S&P 500 lost 0.5 percent to 7,620 points.

The S&P 500's recent decline and strong earnings outlook have pushed the index's valuation down to 19 times expected earnings. This is the lowest value since April 2025. At that time, US President Donald Trump's tariff announcements weighed on global markets.

Leading representatives of AI companies such as OpenAI, Anthropic and xAI warn about the dangers of the models they create and call for a slowdown in AI development. Shares of chip manufacturers such as Nvidia, Broadcom, Micron Technology and Advanced Micro Devices fell. The semiconductor index also fell significantly.

Investors continue to look nervously at the bond market. In the run-up to the US Federal Reserve's upcoming interest rate meeting, the yield on ten-year US government bonds briefly climbed above the five percent mark - for the first time since 2023. "The fact that the ten-year yield is rising above five percent is enormous and speaks volumes," said Jake Dollarhide, head of asset management company Longbow Asset Management. This could put pressure on the Fed to raise rates more than once.

According to data from the CME stock exchange, traders expect a 90 percent probability that the central bank will raise interest rates by 25 basis points on Wednesday. She wants to combat inflation, which is driven by high oil prices. The price of North Sea Brent rose by one percent to $105.68 per barrel on Monday. New attacks on Saudi energy infrastructure and ships in the Middle East fueled concerns about energy supplies.

Software stocks such as Servicenow, Adobe and Workday went against the trend. These papers had recorded losses in the past few days due to concerns about competition from AI companies. Bank of America shares fell. CEO Brian Moynihan expects investment banking fees to fall by at least ten percent in the third quarter.