AI Warnings and Soaring Oil Prices: Signals from Wall Street Ahead of the Fed's Decision

On Monday, September 14 (U.S. time), the New York stock market closed with a modest pullback. The S&P 500 fell 0.5% to 7,619.98, the Dow slid 0.3% to 52,421.20, and the Nasdaq dropped 0.6% to 26,186.41. Despite a sharp decline in AI‐related shares, non-AI sectors stepped in defensively, limiting the indices’ losses.

Yields on the U.S. 10-year Treasury note, a barometer of market interest rates, breached 5% intraday, testing the “5% level” for the first time since 2023. After last week’s consumer price index (CPI) came in higher than expected, the probability of a 25-basis-point rate hike at the September Federal Open Market Committee meeting has climbed into the high-80% range. With no major economic releases that day, bond and oil price movements steered investor sentiment.

The biggest shock hit the AI sector. Over the weekend, Anthropic CEO Dario Amodei warned of an “AI risk capable of dominating the entire Internet within the next 6–12 months,” urging a global slowdown in development—a view echoed by Elon Musk and Sam Altman. Once those remarks circulated, leading AI stocks—already under scrutiny for overheating—tumbled, with Nvidia plunging 3.4% and exerting the largest drag on the S&P 500.

On the global front, renewed concerns over Middle East supply resurfaced. A drone attack on a Saudi pipeline drove Brent crude near $110 per barrel intraday, before it closed at $105.68. Reports of potential U.S.–Iran negotiations later gave back some of the intraday gains. While energy stocks rallied, cost-sensitive sectors like airlines and transportation came under pressure. Alongside South Korea—where Samsung Electronics and SK Hynix plunged—Asian markets also retreated, leaving Korean investors exposed to both an AI valuation reset and Middle East risks simultaneously.