Stock market today: Dow, S&P 500, Nasdaq futures retreat ahead of Fed meeting amid AI safety fears
US stock futures edged lower on Tuesday morning as investors braced for the Federal Reserve's interest rate decision on Wednesday and monitored the fallout from Anthropic CEO Dario Amodei's essay on AI safety fears.
Futures on the Dow Jones Industrial Average ( YM=F ) led the downside, falling 0.6%, while futures on the S&P 500 ( ES=F ) fell 0.5% and the Nasdaq-100 ( NQ=F ) dropped 0.7%.
Oil prices were steady, with Brent crude ( BZ=F ) and WTI crude ( CL=F ) changing hands at $102 and $103 per barrel, respectively. Prices have remained elevated since Saudi Arabia shuttered its East-West pipeline and the Iranian-backed Houthis launched fresh attacks in the Middle East.
Bond yields have also shot up as investors await the next Fed policy decision. On Monday, the 10-year Treasury yield briefly hit 5% , its highest intraday level since 2023. While the 10-year yield ultimately moved lower again, it underscored rising borrowing costs amid concerns about government spending and inflation.
The Federal Open Market Committee is scheduled to begin its September meeting on Tuesday, and traders overwhelmingly expect a rate hike. The release of the so-called dot-plot , along with Fed Chairman Kevin Warsh's press conference, could offer investors clues about the prevailing winds of the Fed's monetary policy.
There's little in the way of economic data and earnings releases, with Forgent Power Solutions ( FPS ) and Vera Bradley ( VRA ) reporting results.
Controversy rocked the tech industry on Monday after the heads of some of the largest AI companies called for pacing the development of frontier AI models.
The uproar kicked off after Anthropic ( ANTH.PVT ) CEO Dario Amodei posted a lengthy essay on Saturday saying that AI labs need to take steps to prevent the technology from causing harm, including slowing the creation of ever more powerful models and asking the government to regulate the broader industry.
Amodei's essay quickly elicited responses from heavyweights across both the tech and political landscapes.
OpenAI CEO Sam Altman: Agrees with Amodei OpenAI ( OPAI.PVT ) CEO Sam Altman wrote in a Saturday post on X that he agreed with his rival, adding, "we need to pace the frontier."
SpaceX CEO Elon Musk: Agrees with Amodei SpaceX ( SPCX ) CEO Elon Musk also chimed in, writing on X, "Dario is right," and adding that he's been warning about the dangers of AI for years. He also replied to a user's post saying that he's open to having AI companies peer review each other's AI models.
Nvidia CEO Jensen Huang: Says extinction fears are made up Nvidia CEO Jensen Huang commented on Amodei's essay and prediction that the technology would kill all humans during an appearance at the All In Summit, saying that while it's important to keep safety in mind, the idea that AI will lead to human extinction is fiction.
Microsoft: Releases AI code of conduct Also on Monday, Microsoft ( MSFT ) released a preliminary code of conduct for developing what it calls humanist AI. The company said the overarching directive driving the code of conduct is "that humans must retain meaningful control over AI so that it can help people live healthier, happier, and more productive lives."
Economic data: ADP weekly employment change, week ended Aug. 29 (+12,000 previously); Empire manufacturing, September (14.1 expected, 20.6 previously)
Earnings calendar: Forgent Power Solutions ( FPS ); Vera Bradley ( VRA )
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Asian shares struggled on Tuesday as investors weighed Middle East tensions and calls by industry figures for a slowdown in AI development, while elevated oil prices and higher bond yields added to caution before key central bank meetings in the U.S. and Japan.
Yemen's Iran-aligned Houthis launched a new attack on Saudi Arabia on Monday, after Riyadh blamed Iran-backed fighters in Iraq for an attack on the kingdom's east-west pipeline that it said could disrupt as much as 4% of global oil supply. Gulf Arab states also postponed planned talks with Iran.
Renewed supply concerns kept markets on edge, with U.S. crude rising 1.27% to $102.68 a barrel while Brent was up 1.21% to $106.96 per barrel.
"Markets are likely to remain focused on the risk that higher crude oil prices could add to inflationary pressures and, in turn, push interest rates higher," said Yokoo Akihiko, analyst at Mitsubishi UFJ Bank, in a note.
