The S&P 500 (SPX) closed down 0.48% on Monday, reaching 4,356.45 points. Additionally, the Dow Jones Industrial Average (DOWI) fell 0.29% to 34,577.04 points, and the Nasdaq 100 (IUXX) decreased by 0.82% to 13,275.16 points. On this day, S&P futures (ESU26) and Nasdaq futures (NQU26) fell by 0.46% and 0.77%, respectively.
Reasons for Market Decline
The stock market on Monday was affected by weakness in the semiconductor and AI infrastructure sectors, reaching its lowest level in the past 6 weeks. Leaders of major AI companies, including Anthropic CEO Daniel Amodei, suggested that the development of this technology should slow down, raising concerns about a decrease in billion-dollar investments in this area.
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Meanwhile, the rise in crude oil prices to their highest level in 3.75 months, along with increasing inflation expectations, put further pressure on the market. Bond yields in the UK and Germany reached their highest levels in 19 and 17 years, respectively. For example, the yield on UK 10-year bonds rose to 5.43% and German 10-year bonds increased to 3.56%.
Impact on Various Industries
The semiconductor industries were severely impacted on Monday. The semiconductor ETF (SOXX) fell by over 5%, and companies like Teradyne (TER) and Arm Holdings (ARM) dropped by 13% and 9%, respectively. Additionally, Lam Research (LRCX) and ASML Holding NV (ASML) saw declines of 8% and 7%, respectively.
On the positive side, software stocks experienced an increase, as the threat of slowing AI costs reduced risks for software companies. Furthermore, bond yields returned to lower levels due to falling oil prices.
Analysts predict a 92% chance of a 25 basis point rate hike in the FOMC meeting on Tuesday and Wednesday. Meanwhile, foreign stock markets are also under pressure, with the Euro Stoxx 50 dropping 1.02% to its lowest level in 6 weeks.
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