US stocks slip as AI safety concerns, weak data weigh on sentiment

On Tuesday, US stocks experienced a decline as concerns surrounding artificial intelligence (AI) safety and unfavorable economic data dampened market sentiment, according to Xinhua. The Dow Jones Industrial Average fell 131.59 points, or 0.26%, to 51,349.92, while the S&P 500 dropped 12.85 points, or 0.17%, to 7,670.84. The tech-focused Nasdaq Composite Index slipped 22.84 points, or 0.09%, to 26,797.54.

Out of the 11 primary S&P 500 sectors, seven closed lower, with energy and materials witnessing the steepest declines at 0.89% and 0.55%, respectively. Conversely, utilities and communication services emerged as the top gainers, up by 1.14% and 0.4%, respectively. The artificial intelligence sector faced renewed scrutiny after a leaked draft prospectus of AI developer Anthropic, which sought a valuation of up to US$2 trillion while highlighting potential existential risks posed by advanced AI systems.

In parallel, rival lab OpenAI postponed the launch of its latest frontier model due to internal safety concerns. The overall market sentiment was further clouded by surging government bond yields, with Oura, a health technology firm, canceling its planned IPO due to heightened market uncertainty. In commodity markets, crude oil prices saw a drop as supply concerns eased, with Saudi Arabia resuming crude transport via its key East-West pipeline and the US and Iran engaging in diplomatic talks.

Consumer confidence in the US hit a 10-year low, and job openings dropped to their lowest level since 2014. Meanwhile, borrowing costs escalated, with the average 30-year fixed-rate mortgage reaching 7.58% for the first time since November 2023, adding pressure to housing affordability ahead of the upcoming monthly nonfarm payrolls report.