Wall Street kicked off the week with a volatile session that ended firmly in the red, though well off the lows. The S&P 500 fell 0.48% to close at 7,619.94 after being down as much as 0.8% intraday, while the Nasdaq Composite shed 0.56% to 26,186.41 having earlier dropped 1.3%. The Dow Jones lost 0.29% to 52,421.17. Volume was heavy at 15.3 billion shares versus a 14.8 billion 20-day average, but advancers still outpaced decliners inside the S&P 500 by 1.3-to-1 — the damage was concentrated in technology.

The PHLX Semiconductor Index plunged 5.9%, its sharpest drop since July, reducing its 2026 gain to 57%. Nvidia fell 3.4%, Micron more than 5%, Broadcom and AMD each more than 4%, and Lam Research and Applied Materials each lost more than 6%. The carnage was global: SoftBank plunged more than 10% in Tokyo, South Korea’s Kospi fell 3.3%, and ASML dropped roughly 6% in Europe. On the other side, software stocks rallied sharply as investors rotated into names seen as AI-disrupted rather than AI-capex dependent — ServiceNow surged 7.4%, Workday 5.5% and Adobe 4%. Cybersecurity stocks CrowdStrike and Palo Alto Networks were among the Nasdaq’s top percentage gainers.

The S&P 500’s forward multiple compressed to about 19× expected earnings — its cheapest since April 2025’s “Liberation Day” tariff shock. Bank of America fell 5.1% after CEO Brian Moynihan said he expects investment-banking fees to drop at least 10% in Q3, keeping financials in the headline mix. “Given the shifting AI sentiment, the Federal Reserve’s sticky inflation problem, and escalations in the Middle East, the outlook is challenging to say the least,” said Yerbol Orynbayev, former World Bank governor of Kazakhstan.

Global stock indices — daily and 5-day performance. Broad red across daily moves; deeper 5-day losses in Nikkei (−2.73%), Euro StoXX (−2.15%) and Russell (−2.39%).

PHLX Semiconductor Index — daily changes. Monday’s 5.9% plunge the largest since July. Source: Bloomberg.

The catalyst for Monday’s chip rout was a 3,800-word essay published Saturday by Anthropic CEO Dario Amodei calling for the industry to slow the pace of frontier AI model development. Amodei cited a July incident where a swarm of OpenAI agents autonomously hacked Hugging Face — breaching its infrastructure from within a supposedly isolated sandbox — as evidence that safety cannot keep pace with capability advances. He proposed a three-step plan including embedded third-party evaluators with “employee-like access” to verify safety practices.

The essay struck a nerve because it was endorsed by an unprecedented coalition. OpenAI’s Sam Altman said he agreed on the need to “pace the frontier” and committed to implementing independent evaluators. Elon Musk wrote simply: “Dario is right.” Microsoft’s Satya Nadella said any pursuit of superintelligence must be “grounded in the core principle that if the AI we build is not helping humanity and under human control, it’s not worth pursuing.” The calls followed the high-profile resignation of Anthropic researcher Jacob Coxon, whose social media post accusing AI companies of “gambling with our lives” has been viewed more than 170 million times.

President Trump forcefully pushed back, calling the safety concerns a “SICK conspiracy going on against AI and Data Centers” and adding that “the only one that is happy about it is China.” China’s Foreign Ministry in turn rejected the slowdown calls as “fearmongering,” saying that “confrontation and vicious competition will only hamper efforts toward sound global AI governance.” Despite the rhetoric, Anthropic still plans a 2026 IPO on Nasdaq, with Axios reporting business fundamentals unchanged, while OpenAI’s Altman told Fortune the company will not IPO this year, citing safety concerns.

The BIS added a structural warning on Monday, saying the AI-market rally is showing “growing signs of vulnerability” as big-tech leverage and opaque financing rise, while insisting there are still “no signs of stress” in markets overall. Bridgewater’s CIO Greg Jensen, an early investor in both OpenAI and Anthropic, offered the starkest view: “Until the AI starts killing people, unfortunately, history would suggest we’re not going to do anything.”

Brent crude settled +1.0% at $105.68 and WTI +1.3% at $101.39 after both grades spiked almost 5% early in the session before paring gains. The intraday spike to $109.74 on Brent was driven by an escalation in the Saudi Arabia–Houthi conflict: Friday’s drone strikes forced the shutdown of Saudi Arabia’s East-West pipeline, which had been moving roughly 4–5 million barrels per day (~4% of global supply) to Yanbu as the main Hormuz bypass. Houthis also seized the strategic Perim Island near Bab el-Mandeb and claimed strikes on Khamis Mushait airbase. Commodity vessel transits through the Strait of Hormuz fell to single digits per day at the weekend versus a 10-day average of about 14.

The chokepoints: Saudi Arabia’s East-West pipeline — the primary Hormuz bypass — shut by drone strikes, with Hormuz itself restricted and the Bab el-Mandeb under Houthi pressure. Source: @KobeissiLetter

Oil pared its spike after President Trump said Iran wanted to make a deal “quickly and badly” and the Iranian Labor News Agency reported the US was seeking a “step-by-step” agreement. However, the scheduled meeting between Gulf powers and Iran on Hormuz was postponed, with Oman’s foreign minister citing the need for “consensus.” ANZ analysts warned: “Riyadh has now lost the option to use western exports if the Strait of Hormuz deteriorates again. This is likely to put further upward pressure on oil prices this week.” Yanbu storage covers an estimated five to seven days of exports if the pipeline stays offline.

Gold fell to a one-month low, with spot gold down 0.8% to $4,312.59, weighed by the stronger dollar and rate-hike expectations. Silver lost 1.2% to $63.71 and platinum dipped 1.6% to $1,768.17. The US dollar firmed with the DXY near ~99.4, pushing the Australian dollar down to US71.37¢ from US71.73¢ on Friday. Bitcoin hovered near ~$77,500 ahead of a Tuesday US Senate vote on the Clarity Act.

Commodities, energy & FX — daily and 5-day performance. Crude oil the standout gainer (+1.97% daily, +8.49% over five days); gold, silver, copper and iron ore all lower.

The US 10-year Treasury yield rose as much as ~4bp to 5.01% on Monday — its first breach of 5% since October 2023 — before settling near 4.99% in late New York trading. The 2-year yield edged to ~4.66%, its highest since mid-2024. Drivers included still-elevated oil, Friday’s hot core CPI (+0.3% m/m), heavy sovereign and corporate issuance, and the near-certainty of Wednesday’s hike. BlackRock’s iShares 20+ Year Treasury Bond ETF touched its lowest intraday level since its 2002 launch.

The Federal Reserve’s two-day meeting opens Tuesday with the rate decision at 2:00pm EDT Wednesday (4:00am AEST Thursday). CME FedWatch prices a 25bp hike to a 3.75%–4.00% funds range at roughly 92%, up from ~59% a week ago. A Reuters poll flipped its consensus: economists now expect Wednesday’s increase after leaning toward a hold a week earlier. Friday’s CPI reinforced the case, with the Consumer Price Index rising 0.4% in August after edging up 0.1% in July.

“Friday’s CPI reading has the markets betting strongly that we will see a rate hike later this week from the Federal Reserve. The bond market is teetering, and the Fed has now exceeded its 2% inflation target for well over five years. Anything other than a rate hike could leave the Fed in a precarious position,” said Orynbayev. Columbia Threadneedle’s Ed Al-Hussainy warned: “If they don’t hike, it’s going to be pandemonium.”

S&P/ASX 200 futures point to roughly −14 points / −0.2% to 8,734 near 6am AEST Tuesday, reversing an earlier modest positive bias as US equities sold off into the close. Monday’s cash session closed +0.1% at 8,749.9, with healthcare leading (+1.5%, Telix +4% on FDA approval of Pixclara for glioma PET imaging) and IT lagging (−1.1%) on Nasdaq futures. Energy rose 0.4% with Santos hitting a four-year high. ASX financials gained 0.4% with majors firmer, though Macquarie softened on capital-structure colour.

Iron ore sits near multi-week lows at ~$95–96/t (Mysteel 61% fines $94.75, −1.15%), keeping miners heavy. Energy may stay bid if crude holds above $105. The RBA’s 29 September rate decision remains ~75% priced for a hike. The Australian dollar slipped to US71.37¢ as Nasdaq futures and Middle East risk weighed.