Market snapshot: cracks start to show in AI surge
AI giant Anthropic has called for a global slowdown in the most advanced AI systems, warning that cutting-edge developments are showing signs of being able to escape human control, writes Richard Hunter.
5th June 2026 09:12
by Richard Hunter from interactive investor
With some cracks beginning to appear in the artificial intelligence (AI) surge, an investor rotation out of technology stocks pushed the Dow Jones to a record closing high.
The catalyst for the move was Broadcom Inc (NASDAQ:AVGO), which posted a huge rise in quarterly revenue but missed analyst expectations and left its guidance unchanged for next year. Shares subsequently fell by more than 12%, dragging the likes of ARM Holdings ADR (NASDAQ:ARM) and Micron Technology Inc (NASDAQ:MU) with it in a read across, and steep losses followed in Asia with South Korea’s SK Hynix plunging 8.4%, Samsung Electronics Co Ltd DR (LSE:SMSN) 5.4% and Japan’s Tokyo Electron shedding 7.2% as the reverberations took effect.
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Quite apart from any potential investor fatigue after what has been a breathless rally of late, there was a timely reminder from Anthropic, which went to the core of the major fears around the development of AI. The company called for a global slowdown in the most advanced AI systems, where it warned that the most cutting-edge of developments are showing signs of being able to escape human control. This would also require a coordinated and agreed approach, particularly in the US and China, for a rules-based approach.
In the meantime, other sectors saw the benefit of renewed buying interest, with notable gains in the Dow for the likes of UnitedHealth Group Inc (NYSE:UNH), JPMorgan Chase & Co (NYSE:JPM) and Walmart Inc (NASDAQ:WMT), while further down the chain Costco Wholesale Corp (NASDAQ:COST) and Eli Lilly and Co (NYSE:LLY) also rose.
The non-farm payrolls report today will be the first with the new Federal Reserve chair Kevin Warsh in place. It will be the first clear opportunity for investors to assess his views on how the Fed will operate, with his already having made it clear that he is not in favour of forward guidance, which in turn could increase market volatility in the absence of the more traditional handholding. In any event, the figures will be as important as ever. It is expected that 85,000 jobs will have been added in May, with the unemployment rate unchanged at 4.3% and any observations on the impact of AI on jobs will also be of interest.
AI is increasingly being used as an excuse for layoffs at present, although the picture is mixed given the recent strength of job openings. As such, a strong report could work to the detriment of stocks, since it could imply an interest rate hike later in the year which could slow economic momentum and weigh on smaller companies in particular.
The record high for the Dow Jones raises its performance to a positive 7.3% in the year so far, while despite any pauses for breath in the tech space, the S&P 500 and Nasdaq remain ahead by 10.8% and 15.4% respectively.
Although free from the shackles of any immediate AI concerns, the FTSE 100 struggled in opening exchanges, and failing to provide a reminder that its defensive characteristics are a viable alternative to volatility elsewhere. The weakness was largely caused by concerns of new regulations which could curb mainland Chinese investors using Hong Kong bank accounts. Shares with a particular Asian focus were unsurprisingly hit on the news, with declines of 1.4% for heavyweight HSBC Holdings (LSE:HSBA), 2.2% for Standard Chartered (LSE:STAN) and 2.3% for Prudential (LSE:PRU).
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In addition, some weakness in the gold price pulled Endeavour Mining (LSE:EDV) and Fresnillo (LSE:FRES) lower, while the general risk-off approach was confirmed by dips for Rio Tinto Ordinary Shares (LSE:RIO) and Anglo American (LSE:AAL). Some minor strength in the supermarkets was insufficient to stem the dreary open, with the gain so far this year of 4.1% for the FTSE 100 currently suffering some erosion with investor attention largely focused elsewhere.
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