NEW YORK, Feb 17 : U.S. stocks dipped in early trade on Tuesday, while gold slid as investors continue to wrestle with the pros and cons of the artificial intelligence boom and nuclear talks progressed between the United States and Iran.
The three main U.S. stock indexes reversed earlier tentative gains, while the dollar gained strength and gold slipped to a one-week low.
Worries that companies are over-investing in AI, and the extent to which the nascent technology could disrupt labor markets have been contributing to investor jitters in recent weeks. The Philadelphia SE Semiconductor index was a clear underperformer.
“The conversation about AI rose to the top of market concerns about two weeks ago, regarding the negative effect on employment in a broad variety of industries, and it’s continuing,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “There’s a lot of validity in that AI will result in less demand for certain types of workers. It clearly has affected the tone of the market over the last couple of weeks.”
Fed Board Governor Michael Barr is expected to speak on “Artificial Intelligence and the Labor Market” later in the day, while San Francisco Fed President Mary Daly is slated to speak on AI and the economy.
On the bright side, the United States and Iran have reached an understanding regarding the “guiding principles” in continuing negotiations over their nuclear dispute, while stressing that a deal is not necessarily imminent, according to Abbas Araqchi, Iran’s foreign minister.
“It’s an optimistic starting point,” Tuz added. “It’s way too early to tell, but the fact that they’re talking and haven’t gotten more aggressive is positive.”
The Dow Jones Industrial Average fell 319.99 points, or 0.64 per cent, to 49,181.86, the S&P 500 fell 58.83 points, or 0.85 per cent, to 6,778.24 and the Nasdaq Composite fell 262.64 points, or 1.15 per cent, to 22,286.53.
European investors kept an eye on U.S.-Iran talks while assessing the extent to which AI could reshape business models.
MSCI’s gauge of stocks across the globe fell 7.68 points, or 0.74 per cent, to 1,034.96.
The pan-European STOXX 600 index fell 0.02 per cent, while Europe’s broad FTSEurofirst 300 index fell 0.01 points, or 0.00 per cent.
Emerging market stocks fell 2.34 points, or 0.15 per cent, to 1,555.52. MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 0.04 per cent, to 796.06, while Japan’s Nikkei fell 239.92 points, or 0.42 per cent, to 56,566.49.
The dollar held gains as markets looked ahead to the release of the minutes from the U.S. Federal Reserve’s most recent monetary policy meeting, which could hold clues regarding the central bank’s path forward with respect to interest rate cuts.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.45 per cent to 97.54, with the euro down 0.37 per cent at $1.1806.
Against the Japanese yen, the dollar strengthened 0.23 per cent to 153.86.
In cryptocurrencies, bitcoin fell 2.86 per cent to $66,873.69. Ethereum declined 2.4 per cent to $1,950.90.
U.S. Treasury yields were mixed in the wake of weaker British economic data and as traders continued to monitor the likely path of Federal Reserve policy.
The yield on benchmark U.S. 10-year notes fell 1.7 basis points to 4.039 per cent, from 4.056 per cent late on Friday.
The 30-year bond yield fell 2.9 basis points to 4.6701 per cent from 4.699 per cent late on Friday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1.2 basis points to 3.422 per cent, from 3.41 per cent late on Friday.
Crude oil prices dipped as supply concerns were eased after news of progress between the U.S. and Iran.
U.S. crude fell 1.53 per cent to $61.93 a barrel and Brent fell to $66.89 per barrel, down 2.56 per cent on the day.
Gold prices touched a one-week low on cooling safe-haven demand, moving in opposition to the strengthening greenback.
Spot gold fell 2.56 per cent to $4,865.59 an ounce. U.S. gold futures fell 3.31 per cent to $4,855.90 an ounce.
