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Stocks take a hit, concerns over AI investments
The jitters are back on Wall Street renewing concerns over A.I. prompting a tech sell off.
LARKSPUR, Calif. - Economic jitters hit the stock market on Thursday, with the Dow, NASDAQ, and the S&P losing digits. This renewed concerns over artificial intelligence (A.I.) prompting a tech sell-off.
With the NASDAQ down 2%, there are concerns A.I. may not be the best investment for the long run.
Two top safety executives at OpenAI and Anthropic this week have re-ignited conversations about A.I.'s consequences.
New jobs?
The 130,000 new jobs lowered unemployment from 4.4% to 4.3%, so the Federal Reserve may not lower interest rates.
Other analysts and experts say they think that jobs number, double what many economists predicted, is just too good to be true.
"I don't know if someone is cooking the books. I don't know what it is. But, it certainly hasn't been matching what we see with the market and that's why no one believed it. Analysts and the bond market didn't believe it," said Fif Ghobadia, Senior Vice President of Origin Point Lending.
But employment lawyer Michael Bernick, a former Employment Development Department Director, said, "If that was the case, it's hard to believe that somebody at a highly, highly professional organization like the Bureau of Labor and Statistics wouldn't have leaked that information, wouldn't have gone to the press."
AI uncertainty
Even with that good job news, the major stock markets all took big hits Thursday out of concerns that AI could grievously damage employment and business in entire industries such as real estate, shipping, software and others.
The bigger worry is that AI companies could have a dot-com style crash.
"Just because I think AI will do very well in the long run doesn't mean every company will do well. There may be some small companies that are pushed out by the big ones and big ones that are pushed out by smaller ones that are more innovative and more versatile," said tech analyst, journalist and founder of ConnectSafely.com, Larry Magid.
If an AI crash were to come, it would be far worse than the dot-com crash which caused NASDAQ to lose 78% of its value. That’s because many large companies with hundreds of thousands of customers are betting the farm on AI.
What they're saying:
Worries about the economy are common.
"Inflation of goods has gone up. Everything has gone up basically. So, you have to put in more hours to get to the means that you're at," said a driver sho calls himself Mr. Ness.
"I think people are struggling. I don't think things are going as well as they could. It's nice to see things bouncing back after the Covid disaster, but things aren't great for a lot of people right now," said Daniel Heubner, a ferry commuter.
There's a lot of proof of what they say. "People are looking for jobs for over a year and that is horrible for the economy and stressful for families that are trying to make ends meet and pay the rent," said ferry commuter Mette Adams.
"It's frightening. I think everything that's going on right now is a little bit frightening. Prices are crazy," said Stephanie Schellhorn, another commuter.
Real estate comeback?
One bit of good news, home buying could soon make a comeback. "I used to approve 2 to 3 people a day. Now I'm approving 5 to 7 people a day. It's going to increase demand," said lending executive Ghobadian.
If Friday's Consumer Price Index shows increased inflation, that's another reason for the Fed to not lower rates.