Key facts
- US stocks declined on Tuesday due to rising oil prices, higher Treasury yields, and concerns about slowing AI development.
- Chipmakers saw a slight rise after Monday's selloff, with Nvidia advancing marginally.
- Alphabet, Amazon, and Microsoft fell more than 1% each amid mixed sentiment toward Big Tech.
- Calls from top AI companies to slow development due to safety concerns added to market anxiety.
- The Federal Reserve is expected to raise interest rates, with traders pricing in a nearly 93% chance of a hike on Wednesday.
- Energy prices were a key driver of inflation concerns, with Brent crude and WTI futures rising.
Wall Street's main indexes slipped on Tuesday, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all trading lower. The declines were driven by a confluence of factors including elevated crude oil prices, rising Treasury yields, and growing unease over the future development of artificial intelligence.
Concerns were amplified by calls from leading AI companies to slow down the technology's development due to safety considerations. While the practical implications of such a slowdown remain unclear, it added to existing market anxieties stemming from above-target inflation and the prospect of higher borrowing costs.
Traders are pricing in a nearly 93% chance that the Federal Reserve will announce an interest rate hike on Wednesday, further pressuring equities. The yield on the benchmark U.S. 10-year Treasury note reached its highest level since 2007.
Energy prices played a significant role in the inflationary backdrop, with Brent crude futures rising 2.6% and U.S. West Texas Intermediate futures up 3.3%. The energy sector was the only major S&P 500 sector to gain, while consumer discretionary led the declines.
In corporate news, Dave & Buster's shares tumbled 17% after its second-quarter revenue missed expectations. Waystar saw a rise of about 7% following a report that the healthcare software firm is exploring strategic options, including a potential sale.