White House Launches 'Super Intelligence Force', The Stock Market Is More Divided Than It Looks

Zaid Admani (0:00)

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Monday, October 5th. In today's episode, we'll tell you why most stocks in the S&P 500 are struggling, despite the index being near record highs. We'll also tell you about the government's latest AI task force, and how Sam Altman and Elon Musk are moving some chip stocks in opposite directions. Then stick around to the end of the show to find out how Tom Cruise's latest movie could end up costing Warner Bros more than $150 million. We got a great show for you today.

Let's go.

Stocks are coming off a mixed week. They did get a nice boost on Friday after the weak jobs report gave investors a reason to believe that the Fed might hold off on hiking rates in October. We broke down that jobs report on Friday's episode, so go check that out if you missed it. After the Fed raised interest rates in September, investors were worried that another rate hike was coming in October, but now the vibes have shifted. According to the prediction market on public, the market is pricing in an 82% chance that the Fed does not hike rates at the October meeting. Now that meeting is happening on October 28th, so a lot can happen between now and then. Maybe the vibes shift again, but for now the stock market is celebrating. Friday's rally pushed the NASDAQ to record highs and the S&P 500 is within 1% of all time highs as well. So on the surface, everything looks great, but when you dig in under the surface, it's not so hot. There was a great breakdown from The Wall Street Journal over the weekend that showed that almost 80% of the S&P 500 stocks fell in the month of September with the average stock dropping about 5%. In fact, only two of the 11 S&P 500 sectors finished higher in September, technology and communication services. And that second group got a big assist because it includes Meta and Google. And if you look at small cap stocks, they also got hit hard with the Russell 2000 dropping 5%. So AI companies are carrying the index to record highs, but non AI companies are having a hard time right now dealing with higher fuel costs and higher borrowing costs because of surging treasury yields. You know, if you're an AI company, the high yields haven't impacted your investment in data centers and AI infrastructure because of how massive the opportunity is. Non AI companies on the other hand don't have that same luxury. In fact, one UBS economist says that outside of AI investments, business investments is basically running at zero. So now the question is, will there come a point where AI companies also pull back on investments? Because remember, many of these AI companies are funding the AI boom now with debt. So when rates go up like they have, they are having to pay more in interest. Right now the 10 year treasury yield sits at 5.3%, but what happens if the 10 year jumps to 6% or even higher? Will big tech companies keep investing at the rate that they are now, or will they pull back some? And what happens if they pull back? What kind of ripple effect will that have on the economy? So I think that's gonna be the key question to watch moving forward. And you know, the next few weeks are gonna be interesting because Q3 earnings season is about to kick off. So we'll hear from all kinds of companies on what impacts they're feeling from higher fuel and borrowing costs. This week, we are getting earnings from PepsiCo and Delta Airlines. And the next week, we're hearing from the big banks. So we'll have a lot to talk about and break down over the next few weeks. Definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.

Let's run through some headlines. And we're talking AI safety again. The White House revealed a new AI task force called the Super Intelligence Force, which honestly sounds like something from a bad Marvel movie. The task force is going to be chaired by Jay Clayton, who is the current Director of National Intelligence. And now the AIs are. The task force also includes VP JD Vance, Pete Hegseth, Scott Besson, plus outside advisors like David Sachs and Condoleezza Rice. This task force has 120 days to report on AI's risk and opportunities and figure out what the government's role should be when it comes to safety and regulation. This includes examining existing laws and possible congressional actions and how the government should respond to AI enabled hacks and other threats. But one thing is clear though, this administration's priority is also keeping the US ahead in the AI race and avoiding regulations that slow down innovation. Jay Clayton told the Wall Street Journal that risk of not being first is high. So we'll see what comes out of this task force. It's essentially a review of what the oversight should look like and not a new set of binding safety rules just yet. So I don't think this should have too much of an impact on the valuations of AI companies. Meanwhile, AI executives will be in New York City today testifying under oath at the New York City Council Meeting about AI's potential dangers. Executives from Anthropic, OpenAI, Google and Meta are all expected to testify and the people testifying will be policy and safety executives and not the CEOs. And apparently it wasn't easy to get these companies to testify, according to the council speaker, OpenAI, Anthropic and Google agreed only after being threatened with subpoenas. Also another speaker at this council meeting will be AI researcher, Jacob Coxon. Remember, he was the guy who quit Anthropic a few weeks ago, saying that these AI companies are gambling with our lives. So yeah, New York City is playing a role in the AI safety debate. Now, I don't think a city council is going to be the one that regulates AI, but we could get some interesting quotes from the city council meeting. Let's talk about some stocks making moves today.