S&P 500 falls as AI worries hit software makers

On September 8, the S&P 500 closed lower, with software companies suffering, as concerns about artificial intelligence impacted the market. Salesforce, ServiceNow, and Intuit all experienced declines. The launch of OpenAI's new model, GPT-6 Astra, revived worries about AI potentially competing with specialized software services. The software and services index of the S&P 500 fell for the second day in a row.

Jed Ellerbroek, a portfolio manager at Argent Capital Management, explained that the excitement surrounding Astra has reignited fears of software disruption, leading to underperformance of software stocks while semiconductor stocks and data center capex beneficiaries continue to do well.

Intel and Qualcomm saw gains following an agreement with Amazon to develop custom AI chips. Traders increased their expectations of an interest rate hike at the Federal Reserve's meeting on September 15-16 after the Labor Department reported a significantly higher job growth in August. This week's producer and consumer price reports are considered crucial data ahead of the Fed's decision, with policymakers seeking evidence of cooling inflation.

Traders now estimate a 60% chance of an interest rate increase at the upcoming Fed policy meeting, as indicated by the CME FedWatch tool. Meanwhile, Apple faces uncertainty as investors anticipate the launch of its latest smartphone during a meeting with CEO John Ternus.

The S&P 500 fell 44.66 points, or 0.58%, to 7,673.94 points, while the Nasdaq Composite dropped 83.30 points, or 0.31%, to 26,423.69. The Dow Jones Industrial Average also declined by 617.15 points, or 1.16%, to 52,797.10. The S&P 500 has gained around 12% in 2026, yet it remains down about 1% from its record-high close on August 13.

The benchmark index is now valued at 19 times expected earnings, down from 21 in early June, according to LSEG data. The lower valuation reflects increased earnings expectations following a strong second-quarter reporting season.

Despite the optimistic earnings outlook, the ongoing conflict between the United States and Iran continues to cast a shadow over equities. Oil prices touched a six-week high on September 8, following attacks by Iran-backed Houthis on Saudi energy facilities, which set oil installations ablaze and threatened a significant escalation in the ongoing Middle East war.

Oil shipping through the Strait of Hormuz slowed, and Iran threatened retaliation for any further US attacks. Jeff DerGurahian, the chief investment officer at loanDepot, stated that the conflict between the US and Iran is evolving from a temporary disruption to a more prolonged market backdrop.

The S&P 500 energy index rose, with Marathon Petroleum and Occidental Petroleum both experiencing gains. Elevated yields on risk-free US Treasuries have made it less appealing for investors to take on the added risk associated with purchasing stocks. Crypto stocks also fell as Bitcoin retreated from $80,000. Coinbase and Strategy both experienced declines.