Nasdaq drags on Wall St as AI slowdown fears hammer Nvidia, chipmakers
By Niket Nishant and Tharuniyaa Lakshmi
Sept 14 (Reuters) – Wall Street’s main indexes fell on Monday, weighed by a selloff in key AI stocks after top U.S. executives cited safety risks and called for a slowdown in the development of artificial-intelligence models.
Shares of Nvidia tumbled 3.2%, hitting their lowest in nearly three weeks, while “Magnificent Seven” peer Amazon shed about 1%.
Anthropic CEO Dario Amodei on Saturday called on artificial intelligence companies to slow the pace at which they advance model capabilities. Elon Musk, who runs xAI, and OpenAI CEO Sam Altman said they agreed with Amodei.
The losses reflect waning exuberance after a frenzied race to develop increasingly capable AI models gives way to a sober reassessment.
Billions of dollars poured into AI have powered a stratospheric rise in some technology and semiconductor stocks and were critical to strong equity market gains over the past few years.
At 09:45 a.m. ET, the Dow Jones Industrial Average fell 126.58 points, or 0.24%, to 52,446.71, the S&P 500 dropped 48.23 points, or 0.64%, to 7,608.28, and the Nasdaq Composite lost 268.13 points, or 1.02%, to 26,064.91.
Chipmakers declined, with Intel, AMD and Marvell Technology down 5.6%, 5% and 6.3%, respectively.
The Philadelphia SE Semiconductor Index fell about 6% and was on track for its worst daily drop since July 1 if current losses hold.
Some investors were unsure if the pullback would last, given the lack of consensus on what the slowdown Amodei advocated for would look like.
“This is probably more of a hiccup for AI stocks as opposed to an eye-opener,” said Dennis Dick, founder and market structure analyst at Triple D Trading.
Seven of the S&P 500’s 11 major indexes traded higher, with healthcare and consumer staples rising about 1% each as investors sought shelter in defensive areas of the market. The technology index was the biggest loser, falling 0.5%.
Shares of software stocks, which have been dampened by concerns AI could disrupt their businesses, climbed. ServiceNow, Adobe and Workday were up 3.8%, 3.6% and 3.2%, respectively.
Meta and Alphabet climbed around 2% each.
TRADERS EXPECT FED RATE INCREASE
Concerns about the potential harms from AI intensified when Anthropic researcher Jacob Coxon resigned last week and said the “people building AI earnestly believe that it could kill us all by the end of the decade.”
The setback in equities could set the tone for markets ahead of a potential interest-rate hike later in the week, with traders pricing in a nearly 89% chance of a rate increase by the U.S. Federal Reserve, according to CME’s FedWatch.
