US stocks dip as Anthropic AI slowdown warning spooks traders
US equity markets opened lower as tech stocks retreated following a warning from Anthropic's CEO over AI development pace, alongside surging oil prices and rising Treasury yields.
On Monday, the U.S. Equity markets opened lower, with the Dow, S&P 500 and Nasdaq all slipping in the first half of the trading day. The drop was triggered by a combination of a sharp rise in the 10‑year Treasury yield, record‑high oil prices and a wave of caution that swept through the technology sector after Anthropic CEO Dario Amodei published an essay urging a slowdown in the pace of AI development.
At the open, the Nasdaq Composite slid 1.2 %, the S&P 500 fell 0.7 % and the Dow slipped 0.3 %.
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Anthropic’s CEO, Dario Amodei, had spent the weekend publishing a 3,800‑word essay in which he warned that the rapid pace of AI development could outstrip safety measures and called for a coordinated slowdown of frontier model releases. Sam Altman, the chief executive of rival OpenAI, agreed on X, saying that the industry should “pace the frontier.” The two statements struck a nerve in the market, causing Nvidia, Intel, AMD and other chipmakers to retreat while companies such as CrowdStrike, Palo Alto Networks and Okta gained on the back of heightened demand for cyber‑security.
In the United States, the 10‑year Treasury yield climbed to 4.97% on Monday, the first time the benchmark had breached the 5 % threshold since October 2023. The rise came as Brent crude spiked to more than $108 a barrel after Saudi Arabia shut its East‑West pipeline in response to Houthi drone attacks. The higher oil price, combined with a surge in U.S. Diesel prices, fed into inflation expectations and pushed the market toward a 90 % probability of a Fed rate hike on Wednesday.
The 30‑year Treasury yield hovered at 5.35%, its highest level since 2007.
European markets mirrored the U.S. Sell‑off. The German DAX dropped 0.5 % and the French CAC 40 slipped 0.8 %, with AI‑related names such as ASML and Nvidia falling over 6 %. In Asia, the Nikkei fell on AI concerns, while the Korean Kospi fell more than 3 % after Korean memory chip makers were hit by the same worries that rattled U.S. Tech stocks.
Oil prices have been the other major driver of the day. Brent crude rose to $107 a barrel, and U.S. Crude approached $104. The spike followed the shutdown of Saudi Arabia’s East‑West pipeline, a key export route that had been operating at about 2 million to 4 million barrels per day prior to the closure. Analysts warn that if the pipeline remains offline for weeks, global oil supply could contract by 4 %, pushing prices higher and feeding inflation.
President Donald Trump weighed in on the situation, urging Ukraine to stop targeting Russian energy infrastructure and calling the AI slowdown a “sick conspiracy.” His comments were met with criticism from AI leaders, who argued that a slowdown would hand the advantage to China. The political frictions added to the atmosphere of uncertainty that traders already felt.
In the U.S. Equity market, the tech sector’s reaction was uneven. While chipmakers and AI‑driven firms slipped, cybersecurity names rallied, and financial names such as Bank of America suffered from weaker earnings outlooks. Bank of America’s CEO, Brian Moynihan, warned that investment‑banking fees were expected to fall by 10‑20 % from the previous year, adding to the pressure on the sector.
Looking ahead, the Federal Reserve’s policy meeting on Wednesday is expected to result in a 25‑basis‑point rate hike, the first in more than three years. The market’s odds for a hike are currently above 90 %. If the Fed raises rates, it could further lift Treasury yields and add pressure on the equity market, particularly on rate‑sensitive tech stocks.
For investors, the day’s events underscore the interconnectedness of macro‑economic forces and technology policy. The AI slowdown warning, while primarily a corporate communication, has had a tangible impact on market sentiment. Meanwhile, the surge in oil prices and the 10‑year yield’s breach of 5 % are feeding into a broader narrative of tightening monetary conditions and rising borrowing costs.
What to Watch Next
- Federal Reserve policy decision on Wednesday – potential 25‑basis‑point hike.
- Saudi Arabia’s timeline for restarting the East‑West pipeline – impacts on global oil supply.
- Any further statements from Anthropic or OpenAI on AI development pace.
- European bond markets – whether yields continue to climb or ease.
As the market grapples with these developments, the interplay between AI policy, energy supply shocks and monetary tightening will likely dictate the trajectory of equity prices in the coming weeks. The day’s events have shown that even a single corporate statement can ripple through the entire market, while macro‑economic factors such as oil prices and Treasury yields can amplify those reactions. Investors will be watching closely for any sign that the Fed will move further against the backdrop of a high‑yield environment and an AI industry that may be forced to slow its most ambitious projects.
