US stocks today: US stocks end lower as AI slowdown fears hit chipmakers

US stocks ended lower on Monday as losses in Nvidia and other chipmakers weighed on the broader market after senior executives at leading artificial intelligence companies raised safety concerns and called for a slowdown in AI development, Reuters reported.

The S&P 500 fell 0.48% to 7,620.05, while the Nasdaq Composite dropped 0.55% to 26,187.79. The Dow Jones Industrial Average declined 0.29% to 52,421.63, according to preliminary data.

The weakness in technology stocks came alongside growing pressure from the bond and oil markets. The benchmark 10-year US Treasury yield briefly moved above 5% for the first time since 2023, adding to investor concerns ahead of this week's Federal Reserve meeting.

AI stocks take a hit

AI-linked stocks fell sharply worldwide after leaders of Anthropic, OpenAI and xAI warned about the risks of rapid AI development. The comments raised fresh questions over the pace of investment in an industry that has powered much of the stock market's gains.

Nvidia, Broadcom, Micron Technology and Advanced Micro Devices all declined, while the PHLX semiconductor index also fell sharply. The losses came as investors reassessed the outlook for chipmakers, whose valuations have been supported by expectations of continued spending on AI infrastructure.

Some software stocks moved against the broader trend. ServiceNow, Adobe and Workday rallied after selling off in recent sessions on concerns that competition from AI companies could pressure their margins.

Yields, oil add to market pressure

The rise in Treasury yields has become another concern for equity investors. High inflation, heavy corporate and government borrowing and worries over the long-term US fiscal outlook have pushed Treasury yields higher over the past month, Reuters reported.

The 5% level for the 10-year yield is particularly important because higher borrowing costs can reduce the relative appeal of stocks and put further pressure on an equity market already facing valuation concerns.

"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.

Markets are pricing in a 90% chance of a 25-basis-point Fed rate increase on Wednesday, according to CME's FedWatch. Investors are also watching oil prices closely as higher energy costs could add to inflation pressures.

Brent crude futures settled 1% higher at $105.68 a barrel after fresh strikes on Saudi Arabian energy infrastructure and attacks on ships in the Middle East raised concerns about energy supplies.

The S&P 500's recent decline, combined with a strong earnings outlook, has brought its valuation down to about 19 times expected earnings, its lowest since April 2025, when Trump's "Liberation Day" tariff announcements triggered a sharp market selloff.

Bank of America also fell after CEO Brian Moynihan said he expects investment banking fees to drop by at least 10% in the third quarter, Reuters reported.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)