U.S. stock indexes slid on Monday, with the Nasdaq 100 falling to a six-week low as weakness in chipmakers and AI infrastructure weighed on investor sentiment. The S&P 500 closed down 0.48%, the Dow Jones Industrial Average fell 0.29%, and the Nasdaq 100 dropped 0.82%. Futures also pointed to a weaker start, with E-mini S&P and September E-mini Nasdaq contracts down 0.46% and 0.77%, respectively.
The pullback in AI-linked names followed proposals by leaders of major artificial-intelligence firms to slow the development of the most advanced models, raising questions about whether the industry’s near-term capital spending momentum could cool. At the same time, bond yields gave back some early gains after crude oil slipped from highs, helping offset inflation concerns for parts of the market, while software stocks held up better on the view that any restraint in AI rollout may be less disruptive than feared for broader enterprise software.
Key takeaways
- Indexes ended lower: The S&P 500 fell 0.48%, the Dow slid 0.29%, and the Nasdaq 100 dropped 0.82% to a six-week low.
- AI-related pressure was the main catalyst: Shares of chipmakers and AI infrastructure sold off after AI leaders proposed slowing development and adding safeguards.
- Oil and rates moved in tandem: Crude fell from earlier highs after comments tied to energy-target de-escalation, pulling back some inflation expectations.
- Sector divergence showed up: Software and cybersecurity stocks rose while semiconductors and banks retreated.
- Policy focus remains ahead: Markets are pricing high odds for a Federal Reserve rate hike at the upcoming FOMC meeting.
What drove the move
According to market coverage, Monday’s decline was anchored in weakness across semiconductors and AI infrastructure. Chipmakers and AI-related infrastructure stocks fell broadly, with the iShares Semiconductor ETF dropping more than 5% and falling to a one-week low.
Shares moved lower after leaders of major AI companies proposed slowing the development of the technology. The report cited Anthropic CEO Amodei as saying the company would introduce fresh safeguards while urging the industry to slow progress on advanced models, with support for the proposal attributed to OpenAI’s Sam Altman and xAI’s Elon Musk. The market read-through was that efforts to restrain AI development could curb parts of the spending cycle that fund data center buildouts and associated hardware.
Data points also pointed to a macro overlay. A rally in crude oil earlier in the session lifted inflation expectations and pushed global interest rates higher, pressuring rate-sensitive stocks. But crude later retreated from the session highs after statements attributed to President Trump that Ukraine and Russia agreed not to attack each other’s energy targets, alongside comments cited from U.S. Energy Secretary Wright that 12 million barrels of crude went through the Strait of Hormuz on Sunday, partially easing supply anxiety.
Market reaction across stocks and sectors
Monday’s trading showed a sharp split between AI hardware and software. Software stocks rose after investors viewed the prospect of slower AI development as less likely to disrupt parts of the enterprise software stack.
Among winners, the report highlighted broad gains across software names including Thomson Reuters, Autodesk, Atlassian, ServiceNow, Adobe, Intuit, Datadog, Workday, and Salesforce. Cybersecurity stocks also rallied, with several large gainers including Zscaler, SentinelOne, Palo Alto Networks, CrowdStrike, Okta, Fortinet, and Cloudflare.
On the downside, semiconductors led the declines. The article cited notable losses among companies including Teradyne, Arm Holdings, Lam Research, ASML, Marvell Technology, KLA, Applied Materials, Intel, NXP Semiconductors, Micron Technology, Advanced Micro Devices, Analog Devices, Broadcom, SanDisk, Western Digital, Nvidia, and Microchip Technology.
Banks were also pressured. The report said Bank of America fell about 4% after CEO Moynihan indicated sales and trading were “relatively flat” in the third quarter versus a year earlier. Goldman Sachs and Morgan Stanley both fell more than 3%, while several other large banks declined between roughly 1% and 2%.
Other idiosyncratic moves included Corning, down more than 13%, after entering a $2 billion equity distribution agreement with Goldman Sachs, and Hewlett Packard Enterprise, down more than 10%, after a downgrade from Evercore ISI citing valuation. Definium Therapeutics rose more than 3% after reporting that a late-stage trial of an investigational pill for generalized anxiety disorder met its primary and key secondary efficacy endpoints.
Bonds, oil, and the Fed outlook
In rates, the report said 10-year Treasury yields fell on Monday, with the 10-year T-note yield dropping about 0.8 basis points to 4.959%. It attributed the shift to crude oil pulling back from its earlier surge after the energy-target de-escalation comments, and also noted that equity weakness supported some safe-haven demand for Treasuries.
Even so, the broader rate backdrop remains tight. The article said markets were discounting a 92% chance of a 25 basis point Fed rate hike at the Tue/Wed FOMC meeting, reinforcing the idea that investors are positioned for further restrictive policy while calibrating the macro impact of energy prices and growth.
Across Europe, yields rose in Monday trading. The report cited a 17-year high for the German bund yield at 3.555% and an increase in the UK gilt yield to a 19-year high of 5.434%. ECB officials also signaled concern around energy-driven inflation pressures, with Isabel Schnabel describing recent energy price developments as “quite concerning,” and Peter Kazimir noting inflation risks are “clearly tilted to the upside.” Markets were reported to price a 69% chance of a 25 basis point ECB hike at the next meeting on October 29.
On commodities, WTI crude futures rose more than 1% earlier in the session to a 3.75-month high, driven by concerns about tighter supply after Saudi Arabia closed a major pipeline following attacks by Houthi rebels. However, crude later fell back from its best level after the energy-target de-escalation comments and related remarks tied to shipments through the Strait of Hormuz.
Bigger picture: global risk and positioning
Overseas markets also closed lower on Monday, the report said, including the Euro Stoxx 50 slipping to a six-week low, Shanghai closing slightly down, and Japan’s Nikkei 225 also dropping to a six-week low. The pattern suggests investors are weighing a mix of AI-policy uncertainty, commodity-driven inflation expectations, and central bank tightening expectations across regions.
With the Fed meeting approaching and the market already pricing a high probability of a rate hike, investor focus is likely to center on how policymakers balance restrictive rates against potential changes in inflation and growth signals. The next catalyst to watch is the Tue/Wed FOMC decision, alongside ongoing moves in crude oil and further guidance from major AI players and chip-related supply chain updates.
