KATHMANDU: The major indices of the US stock market closed lower on Monday after industry leaders warned that the pace of development of artificial intelligence (AI) technology should be slowed a bit.

This public perception of the growing security risks in the artificial intelligence sector has come as unexpected for investors hoping for rapid commercialization and big investment.

In Monday’s trading, the Dow Jones Industrial Average fell 152.09 points, or 0.29 percent, to close at 52,421.20. Similarly, the S&P 500 index fell 37 points, or 0.48 percent, to 7,619.98.

The Nasdaq index, which is more focused on technology companies, fell 146.62 points, or 0.56%, to 26,186.41.

Selling pressure on the technology sector

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Eight of the 11 major sectors under the S&P 500 closed with losses on Monday. The technology sector fell 1.67 percent, while the industrial sector fell 1.44 percent.

In contrast, the communication services sector grew by 2.79 per cent to become the best performer. The health sector also climbed by 1.35 per cent.

The sell-off in tech companies’ shares is mainly due to new concerns about the pace of development and commercialization of artificial intelligence technology.

Assumptions that caution should be exercised in the development of artificial intelligence

Dario Amodei, the CEO of Anthropic, argued in a lengthy article published over the weekend that the pace of development of artificial intelligence models should be controlled.

He said that developers need to be extra careful to address the security risks that arise with the rapid development of artificial intelligence.

Sam Altman, CEO of rival artificial intelligence company OpenAI, also publicly endorsed the idea.

These sentiments are somewhat at odds with expectations from Wall Street, which is expected to continue to see rapid commercialization of artificial intelligence technology, rapid expansion of new products, and massive capital investment in the sector.

Impact on the issuance of shares of a new company

The debate over the security of artificial intelligence and the pace of development has also affected plans to issue shares of new companies.

Altman confirmed that OpenAI has postponed its proposed initial public offering until 2027.

Anthropic, on the other hand, is said to be preparing to list on the Nasdaq in the autumn. While this shows that investor interest in artificial intelligence companies still remains, uncertainty has increased about the future growth trajectory of the industry and the risks associated with it.

Bonds and Energy Market Pressure

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Another reason for the decline in the US stock market is the sharp volatility seen in the government bond and energy markets. The yield on the US 30-year government bond has reached 5.38 per cent. The rise in bond yields indicates that inflation concerns are still high among investors.

Investors are cautious about inflation and interest rate decisions ahead of the US central bank’s upcoming policy meeting.

Middle East tensions drive up oil prices

The price of crude oil in the global market also increased on Monday. Oil prices have increased with the news of Saudi Arabia’s closure of strategic oil pipelines as geopolitical tensions in the Middle East intensify.

Brent crude, the global futures market in London, rose $1.07, or 1.02%, to $105.68 a barrel in November.

The rise in oil prices has raised concerns that it could put further pressure on global inflation. Rising energy costs could increase spending in various sectors from transportation to manufacturing, which could also affect consumer prices.

Stronger than interest rate hike

Rising energy costs, volatility in government bonds and a higher-than-expected U.S. consumer price index on Friday bolstered expectations that the U.S. Federal Reserve may tighten monetary policy in the near term.

Investors expect the US central bank to raise the base rate at 88 per cent on Wednesday, according to financial market estimates.

Rising interest rates could make corporate borrowing costs more expensive and lower the current value of future earnings, putting more pressure on stocks, especially in highly-rated technology and artificial intelligence companies.

U.S. stock markets weighed on Monday on security concerns over the development of artificial intelligence, rising government bond yields, higher crude oil and the possibility of higher interest rates.