AI Phobia

The Reuters Morning Bid highlighted a rapid swing from AI euphoria to AI phobia as investors scramble to identify potential losers. After Anthropic’s software raised alarms about legal‑tech displacement, the panic spread to insurance, logistics, and even office‑service real‑estate firms. A tiny $6 million company knocked the Russell 2000 truck index down more than six percent, while Apple suffered its worst single‑day loss since April. Market participants now prioritize disruption risk over productivity gains, prompting a broad sell‑off that signals heightened sensitivity to any AI‑driven threat.

Microsoft’s AI chief warned that most white‑collar jobs could be fully automated within 12 to 18 months, a claim that carries weight because he sells AI solutions. Start‑ups like Altruos are already offering tax‑strategy software for $100 a month that could replace entire teams, while Insurify’s tool lets ChatGPT compare insurance quotes, unsettling insurers. Financial‑services firms from Charles Schwab to Morgan Stanley face similar pressure as chatbot prototypes claim to perform advisor functions. Regulators have yet to clarify liability, leaving markets to price in potential job displacement and compliance risk.

The timing of the AI sell‑off coincides with the upcoming CPI report, which could shape Fed policy. If core inflation remains above the 2.5 % target, traders may dismiss a June rate cut, reinforcing concerns that AI‑induced unemployment could pressure consumer spending. Conversely, a modest price rise might keep monetary easing on the table, easing market nerves. Investors therefore watch both AI disruption headlines and macro data, aware that a prolonged AI bubble burst could amplify economic headwinds. The episode underscores the need for balanced risk assessment amid rapid technological change.