Stocks Fall And Yields Keep Climbing As Geopolitical Tensions And AI Concerns Dominate The Agenda

Stocks fell and Treasury yields kept climbing on Monday as geopolitical tensions and concerns about AI development continue dominating the public conversation.

The Dow Jones Industrial Average 0.67%, while the S&P 500 fell 0.77%. The tech-heavy Nasdaq Composite underperformed, declining by 0.92%.

Treasury yields also saw gains, with the benchmark 10-year note rising above 5.2% and getting close to reaching the highest level since 2007. The 30-year bond yield topped 5.5%.

Highlights of the session include SpaceX launching its Starship into orbit for the first time on Monday, saying it managed to deploy 26 satellites into orbit and make contact with all of them.

The launch is Starship’s 14th in three years, but it is the first one that goes into orbit. It is expected to do six laps around earth in an attempt to prove it is ready for NASA’s Artemis moon program. It is set to splash down in the Pacific near Chile after about 10 hours.

The company said it wants to make sure everything works before attempting to bring the rocket back to Starbase. Company CEO Elon Musk said earlier this month that, should it explode and debris rain down on people, “our popularity would diminish very rapidly.” If this attempt is successful, the next one will seek to return to the launch pad.

Elsewhere, top figures in the field of AI published a paper on Monday warning that progress is accelerating to a point that could end in an “intelligence explosion.”

In a paper published by the University of Cambridge, the group, comprised of “leading academics, senior scientists of frontier AI companies, and independent experts from civil society,” called on governments to prepare for the possibility of what could be the “most consequential technological development in history.”

The paper went on to note that AI is “rapidly automating AI research and development,” recalling that in late August Anthropic noted that its systems were completing more than 25% of internal AI R&D work with only high-level supervision. That figure only stood at 1% five months earlier. OpenAI also reported that its systems routinely did such tasks. “Based on benchmark trends and other evidence, some experts think that AI R&D could be fully automated within the next few years,” the document added.

Such a scenario could lead to an “intelligence explosion,” compressing years of AI progress into months or less.” This could then allow frontier development to expand exponentially, with a feedback loop “overcoming frictions such as diminishing returns to research labor and
hard-to-automate tasks.”

The intelligence explosion would bring benefits but also dangers. The first category means that improvements could “rapidly obtain superintelligent AI systems that transform many sectors of society, bringing unprecedented breakthroughs in science and industry.”

“However, at the same time they could “could arrive much faster than society can adapt to the resulting risks, such as AI-enabled pandemics, cyber attacks on critical infrastructure, and large-scale labor disruption.”

As for the energy markets, a new report claimed that President Donald Trump is willing to give sanctions relief to Iran and release frozen funds but only if Tehran offers “concrete progress” on the nuclear issue. An official familiar with the matter told CNN that the U.S. is having “positive and constructive discussions through the mediators” even if the countries keep trading threats.