U.S. stocks slipped on Tuesday as concerns about the AI boom met with weakening economic data and stubbornly high Treasury yields. The Dow Jones Industrial Average fell about 0.6%, while the S&P 500 declined 0.3% and the Nasdaq Composite slipped roughly 0.3%.
Markets found some relief from falling oil prices, with Brent crude hovering near $96 per barrel and WTI around $91 as Saudi exports increased and diplomatic talks continued. But the improving energy picture wasn't enough to offset AI safety concerns, a 10-year Treasury yield near 5.3%, and signs that consumers and the labor market are losing momentum.
Market Movers:
- Sangoma Technologies (SANG) +39%: Shares soared after Sangoma agreed to be acquired by an affiliate of BRC Group Holdings in a deal valuing the company at roughly $204 million in enterprise value. The cash-and-stock offer implies consideration of about $5.23 per share, representing a roughly 47% premium to Sangoma’s Monday closing price.
- Summit Therapeutics (SMMT) +21%: Shares surged after AstraZeneca announced a $2 billion equity investment in Summit alongside a clinical collaboration focused on new cancer treatments. The investment provides additional backing for ivonescimab and will allow AstraZeneca to test the drug alongside its expanding oncology portfolio.
- Carnival (CCL) +12%: Shares rallied after the cruise operator beat fiscal third-quarter earnings expectations and raised its full-year outlook despite higher fuel costs. Carnival now expects approximately $7.14 billion in adjusted EBITDA and $3.08 billion in adjusted net income for the year.
- Navitas Semiconductor (NVTS) +8%: Shares jumped after Navitas was selected by the U.S. government to develop next-generation 10 kV silicon carbide power semiconductor technology under an Army program. The project will focus on establishing domestic manufacturing capabilities for ultra-high-voltage SiC devices.
- CarMax (KMX) +6%: Shares climbed after second-quarter revenue jumped nearly 20% year over year, while combined retail and wholesale used-vehicle unit sales increased 14.7%. Comparable-store used-vehicle unit sales rose 13%, and the company plans to resume share repurchases at a modest level this quarter.
- Fair Isaac (FICO) -22%: Shares plunged after TransUnion extended its $0.99 mortgage pricing for VantageScore 4.0 through 2028, increasing competitive pressure on FICO’s dominant credit-scoring business. Rocket Mortgage also plans to make VantageScore 4.0 its preferred model for eligible loans as adoption expands across the mortgage industry.
- Westlake (WLK) -4%: Shares fell after Westlake announced plans to close its PVC plant in Cologne, Germany, citing weak demand, high energy costs and competition from Asian imports. The company expects roughly $205 million in pretax charges and also warned that third-quarter financial performance will weaken sequentially.
- Pharming (PHAR) -3%: Shares slipped after CEO Fabrice Chouraqui stepped down immediately following disagreements with the board over the company’s strategic direction. Pharming appointed Leverne Marsh and Kenneth Lynard as interim co-CEOs while it searches for a permanent successor.
AI Boom Faces New Questions
AI returned to the center of Wall Street’s attention after reports raised new questions about two of the industry’s largest private companies. A leaked Anthropic IPO prospectus reportedly outlined a potential $2 trillion valuation while highlighting significant risks surrounding increasingly capable AI systems. OpenAI, meanwhile, reportedly shelved a next-generation model after safety concerns emerged during internal testing. The developments are adding scrutiny to the AI investment boom just as major private AI companies move closer to potential public-market debuts.
Consumer and Labor Data Flash Warning Signs
Fresh economic data offered a weaker picture of the U.S. economy. The Conference Board’s consumer confidence index dropped to 81.9 in September from a revised 88.6 in August, while its expectations index fell to 63.6 as households grew more pessimistic about business and labor conditions.
Job openings also declined to 7.097 million in August from a revised 7.335 million, missing expectations. The softer JOLTS report reinforces the “low hire, low fire” characterization of the labor market and raises the stakes for Friday’s September employment report.
Oil Falls, but Treasury Yields Stay High
Oil provided one source of relief, with Brent falling toward $96 and WTI trading around $91 as Saudi Arabia increased exports through its East-West pipeline and diplomatic efforts continued around the Middle East conflict. Bond yields remain a bigger obstacle. The 10-year Treasury yield hovered around 5.28%, helping push the average 30-year mortgage rate toward 7.6% and keeping pressure on rate-sensitive parts of the economy.
Looking Ahead
Wall Street now turns toward Friday’s jobs report, where economists expect payroll growth to slow sharply from August. A weaker reading could reinforce concerns about the labor market, while another strong report could keep pressure on Treasury yields by supporting expectations for tighter monetary policy. AI developments will remain another major wildcard. With investors already questioning enormous valuations and infrastructure spending, fresh safety concerns surrounding leading AI developers are giving Wall Street another reason to scrutinize whether the extraordinary expectations embedded in the AI trade can hold up.
