The Nasdaq fell and the 10-year Treasury yield topped 5% amid a global selloff in artificial intelligence stocks following calls from industry leaders for a uniform slowdown in AI development.
Equity markets reacted with concern to a weekend essay by Dario Amodei, in which the Anthropic chief executive warned against a race to the bottom in the development of new AI models. OpenAI leader Sam Altman and Elon Musk backed Amodei's call to check the pace of AI development.
The tech-dominated Nasdaq fell by 1%, with chip makers bearing the brunt of the selloff. Intel dropped 5.7%, while Micron Technology and Marvell Technology both shed around 6.5%. Nvidia fell 3.4%.
Investors are concerned that a pause in the technology's advance would put the brakes on the capital expenditure boom that has driven global equity markets in recent years.
In Asian trade, South Korea's Kospi index dropped 3.3% as mega-cap chip makers SK Hynix and Samsung Electronics lost over 6% and 4%, respectively. Japan's Nikkei was dragged by a more than 10% fall for prominent OpenAI-backer SoftBank Group. Those falls preceded a sharp pullback in European AI-linked stocks, with ASML--the continent's most valuable company--dropping nearly 6%.
Oil prices ramped up over the weekend as the advance of Iran-backed Houthi militants put increased pressure on the Bab al-Mandeb Strait. Moreover, a planned meeting between Iran and other Gulf states Monday to discuss shipping routes was postponed, adding further pressure to prices. Brent crude oil topped $108 a barrel.
Treasury yields ticked higher across maturities, with 10-year yields breaking the 5% mark for the first time since October 2023. Investors are readying for a likely Federal Reserve rate hike Wednesday. Markets currently price an 88.9% likelihood of a quarter-point hike, according to LSEG.
In response to elevated rate-hike expectations, the dollar strengthened and gold continued to fall. The yellow metal traded at around $4,310 a troy ounce. Bitcoin moved 1.6% higher to $78,048.
The Bank of England and Bank of Japan will announce their policy decisions on Thursday and Friday, respectively. The BOE is widely expected to hold rates, while the BOJ is expected to hike. The European Central Bank raised its policy rate last week.