NEW YORK (AP) — Artificial-intelligence stocks are holding a bit steadier following their worldwide slide the day before, as Wall Street overall makes few big moves in the countdown to a decision coming from the Federal Reserve. The S&P 500 slipped 0.2% in early trading Tuesday. The Dow Jones Industrial Average fell 237 points, and the Nasdaq composite fell 0.3%. The main event for the market is coming Wednesday, when the Fed will announce its latest
decision on interest rates. The Fed is widely expected to raise the federal funds rate for the first time in three years to try to rein in inflation.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street futures slid Tuesday but bounced off earlier lows as the opening bell approached.
Artificial-intelligence stocks slid overnight on growing safety fears and oil prices continued to climb as fighting in the Middle East squeezes the global flow of crude.
Futures for the S&P 500 fell 0.2%, while Dow Jones Industrial Average futures fell 0.3%. Nasdaq futures ticked down just 0.1%.
Stocks are also being pressured by rising bond yields. The yield on the 10-year Treasury is trading at 5.01%, up from 3.97% before the war with Iran began in February and at its highest point in 19 years.
An important Saudi oil pipeline will mostly be out of service for weeks following an attack last week, two regional officials told The Associated Press.
The pipeline offered a way for Saudi Arabia to shift exports to the Red Sea and avoid the Persian Gulf’s Strait of Hormuz, where Iranian attacks have stifled the movement of oil tankers.
Benchmark U.S. crude rose $1.03 to $103.61 a barrel early Tuesday. Brent crude, the international standard, gained 0.3% to $106.94 a barrel. Prices for both are up more than 50% since the Iran conflict began in late February.
That jump in oil prices has sent the average cost of a gallon of regular gasoline across the country to $4.33 from $4.08 a month ago and $3.18 a year ago, according to AAA.
Those rising costs have greatly increased expectations that the Federal Reserve this week will hike its main interest rate for the first time in three years to fight stubbornly high inflation, a move that would put the central bank at odds with President Donald Trump’s push for rate cuts.
Like markets, however, the anticipated direction of the Federal Reserve has volatile. As recently as March, the Fed had forecast it would cut its rate once this year. But with the Iran war flaring up again and causing sharp increases in oil and gas prices, inflation is likely to remain well above the Fed’s 2% target for longer.
Besides high inflation, worries about rising debt for the U.S. and other governments and other concerns have sent longer-term Treasury yields to their highest levels in in almost two decades.
Elsewhere, in Europe at midday France's CAC 40 dipped 0.2%, while the German DAX dropped 0.1%. Britain's FTSE 100 edged down nearly 0.4%.
In Asia, Japan's benchmark Nikkei 225 surged in morning trading then lost those earlier gains in afternoon trading, to finish little changed, down less than 0.1% at 63,484.10.
Softbank Group, the Japanese giant that is a major investor of OpenAI, jumped 7.5% in Tokyo trading, recouping its overnight losses.
The decline came after OpenAI Chief Executive Sam Altman said in an interview with Fortune published Saturday that the company behind ChatGPT would likely wait until next year for a sale of its stock on Wall Street. That would delay a potential gusher of cash for Softbank and other early investors in OpenAI.
Australia's S&P/ASX 200 lost 0.9% to 8,672.50. South Korea's Kospi declined 0.9% to 6,627.26. Hong Kong's Hang Seng slipped 1.0% to 24,667.24. The Shanghai Composite lost 0.5% to 3,864.28.
Also weighing on markets are comments from other leaders of the AI industry that warned a slowdown is needed for the safety of humanity.
“The prospect of a coordinated slowdown in AI development remains uncertain, given intense competition both among U.S. firms and between the U.S. and China,” Ng Jing Wen, analyst at Mizuho Bank, said in a report.
AI stocks have been under pressure because of worries their prices shot too high in the frenzy around the technology. The concerns jumped to another level over the weekend after one of the industry’s leading voices, Anthropic CEO Dario Amodei, called for a deliberate and global slowdown in the development of AI.
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Yuri Kageyama is on Threads: https://www.threads.com/@yurikageyama
