Major United States benchmark averages closed lower on Tuesday (Wednesday AEST), as Salesforce and other software makers came under pressure, while renewed hostilities in the Middle East pushed oil prices higher and investors awaited key inflation data that could influence the outlook for interest rates.
The Dow Jones Industrial Average declined 628.2 points, or 1.2%, to 52,786.1. The S&P 500 fell 45.1 points, or 0.6%, to 7,673.5, while the Nasdaq dipped 85.6 points, or 0.3%, to 26,421.4.
Salesforce shed 3.9%, Intuit fell 4.1%, and ServiceNow dropped 5% as OpenAI's launch last week of its latest model, GPT-6 Astra, reignited concerns that artificial intelligence could increasingly compete with services offered by specialised software companies.
Intel surged 9.1%, and Qualcomm added 3.2% after striking a deal with Amazon to develop custom AI chips.
Traders increased bets on an interest rate hike at the U.S. Federal Reserve's 15-16 September meeting after the Labor Department reported last week that employers added far more jobs than expected in August.
This week's producer and consumer price reports are being closely watched ahead of the decision, with policymakers seeking further evidence that inflationary pressures are continuing to ease.
Traders are pricing in a 59.4% chance of an interest rate increase at next week's Fed policy meeting, according to the CME Group FedWatch Tool.
Apple fell 1.2% a day before an event at which it is expected to unveil its latest smartphone under new CEO John Ternus.
Energy stocks bucked the broader decline, with Marathon Petroleum rising 2.3% and Occidental Petroleum gaining 1%.
Crypto stocks also weakened as bitcoin retreated from $80,000. Coinbase lost 3.1%, while Strategy declined 4.4%.
On the bond markets, 10-year and two-year Treasury yields rose 0.2% and 0.6%, respectively, to 4.792% and 4.4%.
