Stock futures fell Monday as worries about the AI trade mount while oil

prices continue to rise.

Leaders of some of the biggest AI companies said that they needed to slow development of the technology for safety reasons, rising concerns about whether demand for AI services and inputs like memory chips could come under pressure.

The calls for a deceleration of AI development were dragging down high-flying tech stocks ahead of Monday's opening bell.

"For markets, the key question is whether this is the first sign that the extraordinary AI investment cycle might eventually moderate," Deutsche Bank said.

Oil prices started the week higher as conflict in the Middle East spread. Iran-backed Houthi militants have seized key territory around the strategic Bab al-Mandeb Strait. Brent crude oil traded close to $108 a barrel.

This week's focus will be the Federal Reserve policy decision on Wednesday, with investors expecting an interest-rate increase. Markets currently price an 86.8% likelihood of a quarter-point hike, according to LSEG.

Elsewhere, the Bank of England and Bank of Japan will also announce new policy decisions on Thursday and Friday, respectively. The BOE is widely expected to hold rates, while the BOJ is expected to hike.

Stocks to watch

CrowdStrike, Palo Alto Networks, Workday: Shares of cybersecurity and other software companies rallied. Many of the shares have been under pressure this year as investors bet their businesses would be displaced by new AI models.

Dave and Buster's is expected to report earnings after the closing bell.

Exxon Mobil and Chevron: The U.S. energy companies' shares climbed alongside oil prices.

Nvidia, Intel, Marvell Technology: Chip stocks slid premarket after leaders of the biggest AI companies called to slow development of the technology, raising questions over chip demand. Overseas chip stocks sold off, including SK Hynix and Samsung Electronics in South Korea and ASML in the Netherlands.

Oracle: The company said over the weekend that co-founder Larry Ellison scrapped plans to sell up to $7.5 billion worth of his Oracle stake, a day after first disclosing the plans. No reason for the change was given. Shares fell 3.5% premarket, swept up in the broader tech selloff.

Watch For:

Canada CPI for August; Canada Monthly Survey of Manufacturing for July

Today's Top Headlines/Must Reads:

- How the Clash Between Money and Safety Created a Monumental Crisis for AI

- Bessent Says the U.S. Can Grow Its Way Out of the Debt Crunch. What Would It Take?

- Tesla Is Reclaiming the U.S. EV Market as Legacy Automakers Retreat

MARKET WRAPS Forex:

The dollar rose to an 11-day high against a basket of currencies, buoyed by increased prospects of an interest-rate hike at this week's Fed meeting and by higher oil prices.

Bonds:

Treasury yields fell across maturities except for small increases on the ultralong end, as investors awaited a likely rate hike by the Federal Reserve on Wednesday.

Higher oil prices were one reason behind last week's rise in Treasury yields, said Payden & Rygel. Another reason was that U.S. economic growth remains remarkably resilient despite a series of shocks, it said, pointing to hyperscalers' continued AI-related capital expenditures.

Energy:

Brent crude rose 2.2% while WTI futures were 2.2% higher.

Metals:

Gold futures traded 1.1% lower as expectations the U.S. will hike interest rates solidify.

Iron ore

Iron ore fell in early trading. Prices were dragged by weak demand due to poor profitability at steel mills, Tongguan Jinyuan Futures said.

TODAY'S TOP HEADLINES

Biggest AI Rivals Agree They Need to Slow It Down

The leaders of three of the biggest AI companies agreed that they needed to slow development of the technology before their advances create a menace that can't be controlled.

It was a rare display of unity by Elon Musk, Sam Altman and Dario Amodei, who have been spending tens of billions of dollars to develop evermore powerful artificial intelligence models. Altman even suggested that his company, OpenAI, may need to delay its much-anticipated IPO to focus on safety.

AstraZeneca Breast-Cancer Drug Misses Goal in Late-Stage Trial

AstraZeneca said its new breast-cancer pill missed the key goal of slowing the disease from worsening in a late-stage clinical trial.

The U.K. drugmaker evaluated its Etcamah medicine, in combination with Pfizer's Ibrance, as a first-line treatment for patients with a type of advanced breast cancer that hadn't received any systemic treatment for advanced disease, it said late Friday.

Forget Robot Workers, This Company Wants to Build Soldiers

Unmanned aerial drones and vehicles are already on the frontlines of military conflicts. Foundation Future Industries wants combat-ready humanoid robots to be next.

The Eric Trump-backed startup is on a mission to build robots for heavy industrial work that could one day go to war.

Hugo Boss Chairman to Step Down After Frasers Talks

Hugo Boss said its supervisory board chairman Stephan Sturm plans to step down after Frasers Group, the company's largest shareholder, reached near-majority ownership and said it would review whether to keep backing him.

The German premium-apparel company said Monday that Sturm's decision followed discussions against the backdrop of recent changes in the company's shareholder structure.

Oil Prices Rise as Saudi East-West Pipeline Attack Threatens Export Routes

Oil prices rose in early European trading Monday as supply concerns intensified after attacks shut a key Saudi oil pipeline and Houthi militants in Yemen tightened their grip on the Bab al-Mandeb Strait, adding pressure on Middle East crude-export routes already constrained by the U.S.-Iran conflict.

Front-month Brent crude oil futures rose 2.9% to $107.68 a barrel, while front-month West Texas Intermediate crude oil futures gained 2.8% to $102.88 a barrel. Both benchmarks ended last week sharply higher, with Brent gaining 8.7% and WTI rising 9.4%.

U.S. Treasury Yields Edge Lower, German 10-Year Bund Yield Hits New 15-Year High

U.S. Treasury yields fell slightly on Monday but remained close to recent multiyear highs, while the 10-year German Bund yield hit another 15-year high as an interest-rate hike by the U.S. Federal Reserve this week looked increasingly possible.

Friday's strong U.S. consumer-price inflation data bolstered expectations for a rate increase at Wednesday's Fed policy announcement, particularly given recent U.S. jobs data that were well above expectations.

BOE Expected to Hold Key Rate, Slow Down Quantitative Tightening

The Bank of England is set to keep interest rates on hold this week, though rate-setters will likely leave the door open to more tightening as tensions in the Middle East escalate further.

Investors are also likely to focus on the continued, albeit slower, reduction of the central bank's sovereign-debt portfolio, as yields on those bonds, known as gilts, have reached multidecade highs.

Oil Prices Rise as Saudi East-West Pipeline Attack Threatens Export Routes

Oil prices rose in early European trading Monday as supply concerns intensified after attacks shut a key Saudi oil pipeline and Houthi militants in Yemen tightened their grip on the Bab al-Mandeb Strait, adding pressure on Middle East crude-export routes already constrained by the U.S.-Iran conflict.

Front-month Brent crude oil futures rose 2.9% to $107.68 a barrel, while front-month West Texas Intermediate crude oil futures gained 2.8% to $102.88 a barrel. Both benchmarks ended last week sharply higher, with Brent gaining 8.7% and WTI rising 9.4%.

One State's Battle to Stop People From Taking Unapproved Weight-Loss Drugs

Tiffinne Perkins, a nurse practitioner who ran an Ohio-based weight-loss clinic called Enbody, appeared on the local news and lifestyle morning show "New Day Cleveland."

"How many people got skinny thanks to you lately?" asked the host, in a segment sponsored by Enbody.

Russia Is Churning Out Smart, Cheap New Weapons Faster Than Ukraine or the U.S.

Just as Ukraine was learning how to parry Russia's drone attacks, Moscow has moved the goal posts with a new generation of innovative jet-powered weapons.

New Geran drones and Banderol cruise missiles are lethal reminders that Russia still has the resources and supply chains to field fresh threats, this time packed with advanced electronics that allow them to find targets accurately and evade interception. Crucially, the leap forward was enabled in large part by components sourced from China, in violation of international sanctions, say Ukraine and others, based in part on wreckage from the few shot down so far.

Widening Mideast Instability Squeezes Global Oil Supplies

DUBAI-Yemen is the latest domino to fall in the chain of instability set off by the U.S. war with Iran, a development that deepens the risk to global energy supplies and complicates efforts to find a diplomatic off-ramp to the conflict.

The impoverished country has long been at war in a forgotten corner of the world. But the lightning offensive by Iran-backed Houthi militants who seized key territory around the strategic Bab al-Mandeb Strait last week has made Yemen an important variable in the growing set of interlocked regional conflicts that are stretching America's military capabilities and handing more leverage to Tehran.

Write to priscila.barrera@wsj.com

TODAY IN CANADA Earnings:

Evertz Tech 1Q

Economic Indicators (ET):

Nothing major scheduled.

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