US Stocks Slide as AI Fears, Oil Prices, and Fed Expectations Weigh
US stocks experienced a decline on Tuesday due to renewed concerns about the threat of artificial intelligence (AI) to software companies, rising oil prices, and shifting expectations for Federal Reserve policy.
The S&P 500 fell 0.58% to 7,673.94, while the Nasdaq Composite declined 0.31% to 26,423.69. The Dow Jones Industrial Average was the biggest laggard, dropping 1.16% to 52,797.10.
Software stocks were among the main drags on the market, with Salesforce, ServiceNow, and Intuit falling, sending the S&P 500 software and services index lower for a second straight session.
The latest selling followed OpenAI's launch of its newest model, GPT-6 Astra, which has revived concerns that increasingly capable AI systems could compete with products and services offered by specialized software companies. Jed Ellerbroek, portfolio manager at Argent Capital Management, noted: 'Astra has kind of reignited the software disruption fears and it's resumed that old trend that we got used to for a while, where semiconductor stocks and data center capex beneficiaries do well, while software stocks do poorly.'
The broader market was also dealing with renewed inflation and geopolitical concerns. Oil prices touched a six-week high after Iran-backed Houthis in Yemen attacked Saudi energy facilities, setting oil installations ablaze and raising the risk of a wider Middle East conflict.
Investors are awaiting producer and consumer price data this week for clues on whether inflation pressures are continuing to ease before the Federal Reserve's September 15-16 policy meeting. Traders now see a 60% chance of an interest rate increase next week, according to the CME FedWatch tool.