Futures Slide, Wall Street Ends Lower on AI Slowdown Fears and Surging Oil Prices

US equity futures slid Monday, with Wall Street closing lower, as a coordinated call by top artificial-intelligence executives to slow model development rattled technology stocks and sent oil prices sharply higher.

S&P 500 futures were down 0.6% as of 8:00 am ET, with Nasdaq futures plunging 1.5%, according to a report from Zero Hedge, setting the stage for the S&P 500's first down-1% day since late July. The cash session ended with the benchmark losing 36.93 points, or 0.48%, to 7,620.05. The Nasdaq Composite fell 0.55% to 26,187.79, and the Dow Jones Industrial Average declined 151.66 points, or 0.29%, to 52,421.63, as reported by Businesstimes and rthk.hk.

The selloff was led by chipmakers and other AI-linked stocks. Nvidia fell 3.4%, Micron Technology dropped over 5%, and Broadcom and Advanced Micro Devices each declined over 4%, according to rthk.hk. An ETF tracking key chip stocks dropped 5% in early trading. In premarket action, Nvidia fell as much as 3.2%, with Intel down 6% and CoreWeave off 7%, Zero Hedge reported.

AI Leaders Call for Caution

The rout was triggered Saturday when Anthropic CEO Dario Amodei said the company would introduce fresh safeguards and urged the industry to slow development of its most advanced models, according to multiple reports. OpenAI’s Sam Altman backed the proposal, while xAI’s Elon Musk said “Dario is right,” Zero Hedge reported.

President Donald Trump downplayed the concerns, while China dismissed them as “fearmongering,” Zero Hedge reported.

“There was a bit of irrational exuberance in the middle of the summer that’s been unwound,” Chris Armstrong at Berenberg told Zero Hedge. “This is, I think, another leg bringing down expectations.”

“Having guardrails would help steer the direction of AI development, but we do not think it is going to slow it down,” noted Mohit Kumar at Jefferies, according to Zero Hedge. “The direction of travel, in our view, would still remain forward.”

Oil Surges, Yields Spike

Adding to the risk-off tone, energy prices jumped. Brent crude futures settled 1% higher at $105.68 per barrel, as reported by Businesstimes and rthk.hk. The rise was driven by new strikes on Saudi Arabian energy infrastructure, attacks on ships in the Middle East, and the shutdown of a Saudi pipeline, according to Zero Hedge. WTI approached $104 per barrel.

The surge in oil prices pushed the 10-year US Treasury yield briefly above 5% for the first time since 2023, before it settled slightly lower. High inflation, heavy corporate and government borrowing, and concerns about the US fiscal trajectory have sent yields higher in the past month.

Fed Rate Hike Expected

Traders are pricing in a 90% chance that the Federal Reserve will raise its benchmark rate by 25 basis points at its policy meeting on Wednesday to combat inflation related to high oil prices, according to CME’s FedWatch. The central bank remains in an external communications blackout ahead of the Sept. 15-16 FOMC meeting.

“The 10-year going above 5% is huge and speaks volumes, and it may pressure the Fed to do more than just one rate hike,” said Jake Dollarhide, CEO of Longbow Asset Management, as reported by Businesstimes and rthk.hk.

Other Market Moves

Software stocks rallied, with ServiceNow, Adobe and Workday advancing. Those names had sold off in recent sessions over concerns that competition from AI companies could hurt their margins, Businesstimes reported. Bank of America dipped after CEO Brian Moynihan said he expects investment banking fees to drop by at least 10% in the third quarter.

The dollar strengthened, with the Bloomberg Dollar Spot Index up 0.4%, according to Zero Hedge. Gold prices sank below $4,300 per ounce. Commodities were mostly lower, except for energy.

Volume on US exchanges was elevated, with 15.3 billion shares traded, compared to an average of 14.8 billion over the previous 20 sessions, according to rthk.hk.

Asian Markets Set to Drop

Asian stocks were set to decline Tuesday, tracking the US selloff as concerns about the pace of AI development persisted and inflation worries kept yield pressure elevated, Bloomberg reported.

The S&P 500 now trades at 19 times expected earnings, its cheapest since April 2025 when President Donald Trump’s “Liberation Day” tariff announcements disrupted global markets, Businesstimes reported.