Wall Street Tumbles: AI Safety Concerns Spur Market Losses

Wall Street declined as AI safety concerns by leaders of top AI firms led to losses in chipmaker stocks. The 10-year Treasury yield exceeded 5%, raising investor anxiety ahead of the Federal Reserve's meeting. High inflation and borrowing also contributed to market downturns.

Wall Street faced a downturn on Monday, driven by declines in Nvidia and other chipmakers after prominent U.S. AI company executives raised safety concerns about artificial intelligence development. The apprehension among investors was compounded by the benchmark 10-year Treasury yield briefly surpassing 5% before an anticipated Federal Reserve meeting.

Global AI-linked stocks saw a significant plunge after leaders from Anthropic, OpenAI, and xAI highlighted risks from the rapid development of AI, posing the gravest threat to the billions invested in the sector driving markets to new heights. Nvidia shares dropped 3.4%, Micron Technology over 5%, and both Broadcom and Advanced Micro Devices fell more than 4%.

Worries about high inflation and borrowing have led to increasing U.S. Treasury yields, with analysts warning that surpassing the 5% mark could impact the broader U.S. economy and equity markets. The likelihood of the Federal Reserve raising interest rates by 25 basis points on Wednesday is at 90%, with traders attributing this expectation to efforts to combat inflation amid rising oil prices.