AI’s safety debate hits stocks as oil prices surge

On Monday, artificial-intelligence stocks worldwide were sliding after leaders warned of a need for a slowdown in AI development to ensure safety for humanity. Another surge in oil prices briefly pushed the bond market to a recent high, with the 10-year Treasury yield reaching 5 percent for the first time since 2023. Despite the negative impact on Wall Street, gains for many other stocks helped curb the market's losses, with the S&P 500 declining only 0.3 percent.

The Dow Jones Industrial Average dropped 74 points, or 0.1 percent, while the Nasdaq composite fell 0.4 percent. AI stocks have been under pressure due to concerns about their prices becoming too high during the technology frenzy. However, a temporary cooling of oil prices helped alleviate some of the losses. The Dow Jones Industrial Average was down 74 points, and the Nasdaq composite lost 0.4 percent as of noon Eastern time.

Nvidia, a major player in the AI field, dropped 2.8 percent, while SpaceX declined 0.1 percent after Elon Musk expressed agreement with Anthropic CEO Dario Amodei's call for a slowdown in AI development. Softbank Group, a major investor in OpenAI, fell 10.7 percent after OpenAI's Sam Altman echoed the sentiment. In South Korea, the Kospi index dropped 3.3 percent, with Samsung Electronics and SK Hynix suffering significant losses.

President Donald Trump downplayed the need for his administration to regulate AI development, citing concerns about ceding U.S. technological edge to China. Despite calls for a slowdown, Trump claimed the U.S. has "that," referring to a "STRONG AND SMART (High IQ!)" president. Oil prices continued to rise as tensions in the Middle East disrupted global oil supplies.

Brent crude oil prices increased 2.7 percent to $107.46 per barrel, following a near-$110 peak earlier in the day. A significant Saudi oil pipeline, which would have allowed Saudi Arabia to export oil via the Red Sea instead of the Persian Gulf, was expected to be out of service for weeks following an attack. Brent crude prices have risen from under $72 in early July, as doubts grow about the possibility of an agreement between the U.S. and Iran to restore oil tanker traffic through the Strait of Hormuz.

The jump in oil prices has pushed the cost of regular gasoline in the United States to nearly $4.32 per gallon, a rise from $4.08 a month ago and $3.18 a year ago. Higher inflation has prompted Wall Street expectations of an interest rate hike by the Federal Reserve at its next meeting, potentially impacting bond markets and overall economic growth.