The S&P 500 fell 0.2% Monday, clawing back most of an earlier 0.8% decline, as a spike in oil prices and calls to slow artificial intelligence development pressured technology stocks. Brent crude briefly topped $108 a barrel after Gulf-Iran diplomacy over the Strait of Hormuz stalled, while an essay from Anthropic CEO Dario Amodei urging a slower AI buildout dragged the tech sector down nearly 2%.
Tech slides on AI slowdown calls
The S&P 500 shed 0.2% to 7,641.27 points, having earlier eaten into a decline of as much as 0.8%. The Nasdaq Composite fell 0.2% to 26,293.29 points after dropping as much as 1.3% earlier in the session. The Dow Jones Industrial Average edged up to 52,583.40 points, having dipped as much as 0.6% earlier in the day.
Tech shares bore the brunt of the pullback: the S&P 500 technology sector dropped nearly 2%, dragged down by comments from Anthropic CEO Dario Amodei. In an essay published Saturday, Amodei called on AI firms to decelerate the pace of advancement in cutting-edge models, citing growing concern the systems could be misused. His stance drew backing from OpenAI CEO Sam Altman and xAI's Elon Musk, fueling speculation about a slowdown in tech-sector AI infrastructure spending. Altman also said OpenAI would not go ahead with a possible public offering this year due to safety concerns.
Not every analyst reads the essay as bearish for AI capital spending. Deutsche Bank analysts said it could just shift how AI capex is composed rather than reduce its overall scale, as firms redirect more spending toward safety and governance.
Oil surge compounds the pressure
Beyond AI, diplomacy aimed at reopening the Strait of Hormuz has stumbled. A meeting between Gulf powers and Iran was postponed, with Oman's foreign minister saying the gathering was delayed to preserve consensus among participants. Iran's foreign ministry said it would coordinate with Oman on a new date, according to Fars news agency.
Adding to the strain, Houthi militant strikes closed a critical Saudi Arabian oil pipeline, while attacks on vessels in the Gulf threatened further supply disruption. As a result, Brent crude futures briefly surpassed $108 a barrel Monday, extending gains from last week that have kept markets on edge over energy-driven inflation.
Traders are now looking to Wednesday's Federal Reserve interest rate decision, widely expected to raise rates to counter energy-fueled inflation. That expectation follows elevated August consumer and producer price readings. According to Vital Knowledge: "stocks are under assault from two main sources this morning: oil and AI".
Source: All News
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