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  • Why JPMorgan is warning the Fed rate cut everyone expects could sink stocks

    Why JPMorgan is warning the Fed rate cut everyone expects could sink stocks

    By Barbara Kollmeyer

    Even powerful retail investors are starting to step back

    Stock investors could be facing a “sell-the-news” moment when the Fed meets this month, warns JPMorgan.

    Since Fed Chairman Jerome Powell’s comment that a rate-cut could be justified at Jackson Hole last month, the S&P 500 has gained nearly 2%, bringing the year’s total to just over 10%.

    Traders now expect three cuts in 2025, starting with a 25-basis point cut on Sept. 17, and several in 2026. Those, many say, could help juice a stock market that has shook off all manner of perceived headwinds this year.

    Read: Stock-market bulls are banking on rate cuts as CPI inflation looms

    But what if that much-awaited first interest-rate reduction causes stocks to drop? That’s the message from our call of the day as JPMorgan’s trading desk warn clients that a potential selloff could be ahead.

    Led by Andrew Tyler, the trading team voiced “concerns that the September 17 Fed meeting which delivers a 25bp cut, could turn into a ‘sell the news’ event as investors pullback to consider macro data, Fed’s reaction function, potentially stretched positioning, a weaker corporate buyback bid, and waning participation from the retail investor.”

    Breaking that down starting with macro concerns, Tyler and his colleagues say that with labor supply waning, rate cuts could spark more demand for workers, triggering “sticky” wage inflation. Inflation-related comments from public and private companies suggest “more tariff-induced cost passthrough is coming,” they add.

    The Fed’s reaction function is a simply a reference to how a central bank adjusts its policy according to changing economic data. By that, the team is referring to how much inflation the Fed is willing to tolerate at the expense of shoring up the jobs market.

    As for “stretched positioning,” the JPMorgan team spoke of “above average, but declining” exposure to U.S. stocks, with hedge funds “small sellers” of North America and Asia Pacific. Citigroup strategists also spoke of easing momentum for U.S. stocks in a note that published Tuesday.

    And while share repurchases from S&P 500 companies hit a record in the first half of 2025, Goldman Sachs said that’s been stalling of late, in a note to clients on Monday.

    Finally, JPMorgan speaks of “waning” momentum from retail investors, who have been a buy-the-dip force for stocks this year, forcing bigger Wall Street players to catch up. Seasonal factors appear to enter in here, with Citadel Securities strategist Scott Rubner recently pointing out how “retail options volume typically wanes in September before rebounding into the final quarter of the calendar year.”

    The sell-off might not last long: Tyler and his colleagues are sticking to a “lower conviction tactical bullish call” on equities, as they say the current bull market for stocks seems “unstoppable.” They see an AI theme re-emerging as a “significant support” for stocks, especially if the Magnificent 7, which hit a new record last week, expands to include Broadcom (AVGO) after its recent impressive results.

    One suggestion from Tyler and his colleagues, is that investors may want to consider either adding or upping their gold (GC00) exposure as rate-cut expectations push down the dollar DXY. Goldman Sachs, which expects another 2% gain for the S&P 500 this year, has also advised exposure to gold, through mining stocks.

    Read: Fed is almost certain to cut rates by 25 basis points after months of debate. Why are so many people unhappy with that?

    The markets

    U.S. stocks SPX DJIA COMP are rising, while longer-term Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD30Y are modestly up and oil (CL00) (BRN00) is also gaining. Gold (GC00) has surpassed a record $3,700 an ounce. Elsewhere, French bond yields BX:TMBMKFR-10Y are now the second-highest in the eurozone after the Francois Bayrou-led government collapsed. 

       Key asset performance                                                Last       5d      1m      YTD      1y 
   S&P 500                                                              6495.15    0.54%   1.91%   10.43%   18.72% 
   Nasdaq Composite                                                     21,798.70  1.60%   1.93%   12.88%   29.10% 
   10-year Treasury                                                     4.064      -19.90  -23.00  -51.20   41.40 
   Gold                                                                 3685.8     2.40%   8.42%   39.65%   44.79% 
   Oil                                                                  62.84      -4.24%  -0.38%  -12.56%  -5.23% 
   Data: MarketWatch. Treasury yields change expressed in basis points

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    The buzz

    The Bureau of Labor Statistics said there were 911,000 fewer jobs created in the 12 months ending in March than previously estimated. A downward revision was expected.

    In a mega-mining deal, Anglo American (UK:AAL) agreed to a $53 billion merger of equals with Canada’s Teck Resources (TECK) (CA:TECK.A), with shares of the latter up 23%.

    Tourmaline Bio (TRML) stock is up over 50% after Novartis (NVS) said it was buying the U.S. biotech at a near 60% premium.

    Nebius shares (NBIS) are up a similar amount after the neocloud company signed a multi-year deal worth $17.4 billion with Microsoft (MSFT). From the archives: The stock market is turning into a casino – raise cash, and also buy this AI company, says strategist

    UnitedHealth stock (UNH) is jumping after the healthcare group said in a filing that it expects to have 78% of membership in 4 star or higher plans, in line with its expectations.

    Apple (AAPL) is expected to reveal four new iPhones, including a slimmer one, and other products at the “Awe Dropping” event starting at 1 p.m. Eastern.

    Oracle (ORCL) (preview here) and Synopsys (SNPS) will report results after the close.

    Best of the web

    ‘Frenzied as ever’ – the Dan Ives-led Worldcoin treasury purchase is only latest example of market madness.

    Murdoch family settles battle over trust.

    A visual breakdown of the Trump birthday letter to Epstein.

    The chart

    From Oxford Economics, is this chart underscoring the U.S. in everything from world trade to the stock market. “It’s unlikely that the U.S. will grow more slowly than other advanced economies for an extended period, in part because a weaker U.S. will drag down other economies,” said lead economist Adam Slater, who forecasts the U.S. economy to grow at a 1.2% to 1.3% rate to close the year.

    Top tickers

    These were the top-searched stock-market tickers on MarketWatch as of 6 a.m.: 

       Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   NBIS    Nebius Group 
   OCTO    Eightco Holdings 
   OPEN    Opendoor Technologies 
   NIO     NIO 
   AAPL    Apple 
   TSM     Taiwan Semiconductor Manufacturing 
   AMD     Advanced Micro Devices

    Random reads

    Emil the moose is on the loose and creating a sensation in Austria

    “To Nice,” not Tunis. How a pair of TikTokers ended up in Africa.

    Spanish man breaks world record running backwards in heels.

    -Barbara Kollmeyer

    This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. 

    
  (END) Dow Jones Newswires
    

    
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    Copyright (c) 2025 Dow Jones & Company, Inc.

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  • Tiny blood vessels may fuel the spread of cancer cells

    Tiny blood vessels may fuel the spread of cancer cells

    Most people think cancer becomes deadly when a tumor grows too large. But that’s not exactly true. In many cases, the real threat comes when cancer spreads.

    This process, called metastasis, is responsible for the vast majority of cancer deaths. It’s not the tumor in one spot; it’s the new ones appearing in the brain, bones, or lungs that cause the damage.


    Now, researchers have found something surprising: it might not be the cancer cells themselves that decide to spread. It could be the journey they take through the body. Being squeezed through the body’s tiniest blood vessels may transform them into a more dangerous version of themselves.

    Testing cancer cells in tight spaces

    Our blood vessels get incredibly narrow, especially in the capillaries – tiny tubes just wide enough for blood cells to pass through. Experts built a special lab device that mimics how these vessels work.

    The researchers wanted to see what happens when cancer cells are forced through narrow spaces, like what they’d experience moving through blood.

    The team used melanoma cells for the experiment. These are skin cancer cells known for spreading quickly and aggressively.

    The device was made from a soft plastic material and contained channels as small as five micrometers wide – far narrower than a human hair. When the melanoma cells were forced through these channels, something changed.

    Cells reprogrammed under stress

    Study lead author Dr. Giulia Silvani created the device at the Australian National Fabrication Facility, a joint venture between UNSW, the University of Sydney, and UTS.

    “Within 15 minutes of being squeezed through the smallest channels, we observed how the melanoma cells became physically deformed,” said Dr. Silvani.

    “When we analyzed the cells, we detected proteins linked to cancer spread and stem cell-like behavior – suggesting that the mechanical stress had reprogrammed them to adopt this new state.”

    That’s important. Cancer cells that act like stem cells can multiply more easily and survive in different environments. This makes them much more likely to form new tumors in other parts of the body.

    Squeezed cells grow more tumors

    To test whether these changes made a difference in a living system, the researchers injected the “squeezed” melanoma cells into mice with weakened immune systems. These mice were also given unsqueezed cancer cells for comparison.

    After 30 days, the results were clear. Mice injected with the squeezed cells developed far more tumors in the lungs, bones, and brain. The squeezing made the cells more aggressive and more likely to spread.

    “One of the most exciting aspects of this project was the chance to study metastatic cancer cells in a way that hasn’t been possible before,” said Dr. Silvani. “Their journey through the body is so hidden, leaving little trace and making them incredibly difficult to capture in action.”

    “We were able to recreate that journey in the lab, giving us a rare glimpse into the moment when these cells switch into their most aggressive state.”

    Pressure reshapes cancer cells

    This new discovery supports a longstanding idea among scientists: that mechanical pressure – like being squeezed through narrow blood vessels – can change cancer cells. But now, there’s real evidence to show how it happens.

    Professor Kris Kilian, who co-authored the study, explained what this could mean going forward.

    “These results open up new possibilities for prognosis and treatment, by targeting the mechanical forces that lead to metastasis,” he said.

    New paths for diagnosis and care

    One future approach could be using imaging, like MRI scans, to find areas in the body with lots of tiny blood vessels.

    These spots might be more likely to trigger the kind of cellular change seen in the study. Doctors could then watch those areas closely or even find ways to reduce the risk of cells squeezing through.

    Another possibility is to look at cancer cells floating in a patient’s blood. Doctors could then test how easily those cells can transform under pressure. This could help doctors figure out how likely the cancer is to spread in a specific person.

    “The point is, it used to be thought that it was just this extremely rare type of cell that found its way from a primary tumor to a spot where they could invade,” said Kilian.

    “But no, in some cases it’s actually the squeezing that changes the cell into this rare type, and it could put cancer researchers in a much stronger position to devise new treatment strategies.”

    Breast cancer shows blood effect

    About 90 percent of the work so far has focused on melanoma. But Kilian believes this squeezing effect might show up in other cancers too. He mentioned early results in breast cancer experiments look promising. More testing is planned across different types of tumors.

    “I believe we’ll find evidence that many solid tumors metastasize this way – we’re already seeing compelling evidence when we repeat these experiments with breast cancer – and I’m looking forward to testing a range of cancer cell types in the lab,” he said.

    Dr. Silvani is also eager to continue the work. She sees huge value in using engineering tools to better understand how cancer behaves.

    “Watching this idea grow from a spark of intuition into a real discovery has been deeply inspiring,” she said. “It’s a powerful reminder of what can be achieved when engineering and biology come together.”

    “Cells are intricate machines, and unraveling their mysteries requires precise design and innovative tools, guided by the insights biology provides.”

    This discovery doesn’t promise a cure. But it’s a fresh way of thinking about how cancer spreads – and a step closer to finding new ways to stop it.

    The full study was published in the journal Nature Communications.

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  • Oil Futures Extend Gains on Geopolitical Risk – The Wall Street Journal

    1. Oil Futures Extend Gains on Geopolitical Risk  The Wall Street Journal
    2. Oil prices rise in global markets  Azərtac
    3. Oil climbs 1% on reports of EU’s sanctions on China  breakingthenews.net
    4. Crude Oil Forecast Today 09/09: Attempts to Bounce (Chart)  DailyForex
    5. Why Oil Prices Are Rising Even After OPEC Hiked Production Again  MSN

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  • The Growth Playbook: Goldman Sachs’ Darren Cohen on Building a Growth Investing Platform

    The Growth Playbook: Goldman Sachs’ Darren Cohen on Building a Growth Investing Platform

    Goldman Sachs’ Darren Cohen, co-head and chief investment officer of Growth Equity within Goldman Sachs Asset Management, discusses his career trajectory and investment philosophy, and where he sees opportunity today.

    This episode was recorded on August 11, 2025.

    The opinions and views expressed herein are as of the date of publication, subject to change without notice, and may not necessarily reflect the institutional views of Goldman Sachs or its affiliates. The material provided is intended for informational purposes only, and does not constitute investment advice, a recommendation from any Goldman Sachs entity to take any particular action, or an offer or solicitation to purchase or sell any securities or financial products. This material may contain forward-looking statements. Past performance is not indicative of future results. Neither Goldman Sachs nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or information contained herein and disclaim any liability whatsoever for reliance on such information for any purpose. Each name of a third-party organization mentioned is the property of the company to which it relates, is used here strictly for informational and identification purposes only and is not used to imply any ownership or license rights between any such company and Goldman Sachs.

    A transcript is provided for convenience and may differ from the original video or audio content. Goldman Sachs is not responsible for any errors in the transcript. This material should not be copied, distributed, published, or reproduced in whole or in part or disclosed by any recipient to any other person without the express written consent of Goldman Sachs.

    For additional disclaimers and regulatory disclosures, please visit

    www.goldmansachs.com/insights/podcasts

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  • Red sea undersea cables cut: What damaged submarine cables & impacted internet? Here is what experts say

    Red sea undersea cables cut: What damaged submarine cables & impacted internet? Here is what experts say

    Internet services in parts of Africa, Asia and the Middle East have been disrupted after undersea cables in the Red Sea were cut, highlighting the vulnerability of the global network infrastructure just a year after a similar incident.As the news came to light, many are left wondering as to what may have cut the lines.

    Houthis, Iran Unleash New Hybrid War At Sea? Undersea Cable Cuts Cripples Internet In These Regions

    According to experts, the cables were likely damaged by commercial shipping activity in the region.The International Cable Protection Committee (ICPC) told AP that 15 submarine cables pass through the Bab el-Mandeb Strait, the narrow waterway between East Africa and the Arabian Peninsula. This makes it one of the most critical and congested routes for global communications.Authorities identified damage to the South East Asia–Middle East–Western Europe 4, the India-Middle East-Western Europe and the FALCON GCX cables. By Tuesday, the Europe India Gateway cable was also confirmed to have been affected, according to Doug Madory, director of internet analysis at Kentik.

    Poll

    Should international organizations take action against countries with frequent cable disruption incidents?

    Early reports indicated that the cables were cut near Jeddah in Saudi Arabia, though authorities and cable operators have not confirmed this.“Early independent analysis indicates that the probable cause of damage is commercial shipping activity in the region,” said John Wrottesley, the ICPC’s operations manager. “Damage to submarine cables from dragged anchors account for approximately 30% of incidents each year representing around 60 faults,” John added.Madory told the AP that as per experts a commercial ship likely dropped its anchor and dragged it across the four cables, cutting them. Because some sections of the Red Sea are shallow, anchors can more easily damage the lines. Undersea cables form a key part of the global internet system, alongside satellites and land networks, with providers usually rerouting traffic when one link goes down.The disruptions affected at least 10 countries, including India, Pakistan and the United Arab Emirates. While no nation went completely offline, internet providers lost significant portions of their international capacity.“Nobody’s completely offline, but each provider has lost a subset of their international transit,” Madory said. “So if you imagine this is like an equivalent to plumbing and you lose some volume of water coming down the pipes … and now you just have less volumes to carry the traffic.”Undersea cables form the backbone of the internet, carrying most of the world’s data traffic. Providers usually reroute through alternative links when one line is damaged, but this often causes slower connections and latency, AP reported.The incident comes against the backdrop of security fears in the Red Sea, where Houthi rebel attacks on ships have raised concerns about risks to undersea infrastructure. Earlier in 2024, Yemen’s internationally recognised government in exile alleged that the Houthis planned to target cables. Several were later severed, possibly by a ship struck in one of the attacks dragging its anchor, though the Houthis denied responsibility.


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  • Diabetes remains undiagnosed and untreated among a large portion of the global population

    Diabetes remains undiagnosed and untreated among a large portion of the global population

    A large portion of the global population with diabetes remains undiagnosed or is not receiving optimal care, according to a new study published in The Lancet Diabetes & Endocrinology. The Institute for Health Metrics and Evaluation (IHME) at the University of Washington School of Medicine and a global network of collaborators conducted the analysis of the diabetes care cascade for all ages, both sexes, and 204 countries and territories from 2000 to 2023.

    In 2023, an estimated 44% of people aged 15 and older with diabetes are unaware of their condition. Underdiagnosis was greatest among young adults-despite facing higher risks for long-term complications.

    Among those who were diagnosed, 91% were on some form of pharmacological treatment. However, of those receiving treatment, only 42% had their blood sugar levels managed optimally. This translates to just 21% of all people with diabetes globally having their condition under optimal management.

    Despite improvements over two decades, the research also found substantial regional diagnosis and treatment disparities, particularly in low- and middle-income countries. High-income North America had the highest rates of diagnosis, while high-income Asia Pacific showed the highest rates of treatment among diagnosed individuals. Southern Latin America had the highest rates of optimal blood sugar management among those treated. In contrast, Central sub-Saharan Africa faced the largest gaps in diagnosis, with less than 20% of people with diabetes being aware of their condition.

    By 2050, 1.3 billion people are expected to be living with diabetes, and if nearly half don’t know they have a serious and potentially deadly health condition, it could easily become a silent epidemic.”


    Lauryn Stafford, first author and researcher at IHME

    Given the pace at which cases are rapidly rising, the research underscores the urgent need for investment in screening programs for younger populations and access to medications and glucose-monitoring tools, especially in underserved regions. In 2022, the WHO set a target to have 80% of people with diabetes clinically diagnosed by 2030.

    The study was funded by the Bill & Melinda Gates Foundation.

    Source:

    Institute for Health Metrics and Evaluation

    Journal reference:

    Stafford, L. K., et al. (2025) Global, regional, and national cascades of diabetes care, 2000–23: a systematic review and modelling analysis using findings from the Global Burden of Disease Study. The Lancet Diabetes & Endocrinology. https://doi.org/10.1016/S2213-8587(25)00217-7

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  • Musk's pay package: How does Tesla get to $8.5 trillion in value? – Reuters

    1. Musk’s pay package: How does Tesla get to $8.5 trillion in value?  Reuters
    2. Elon Musk Could Become First Trillionaire Under New Tesla Pay Plan  The New York Times
    3. Tesla’s nearly $1 trillion new pay plan for Musk would expand his voting power  CNBC
    4. FORTUNE: Musk holds hostage history’s biggest meme stock delusion  Yale School of Management
    5. Tesla Sets out $1tn Performance-Based Pay Deal for Elon Musk  Manufacturing Digital Magazine

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  • Technology Transactions Rising Star Tom Oslovar Joins Baker McKenzie as a Partner in Palo Alto | Newsroom

    Technology Transactions Rising Star Tom Oslovar Joins Baker McKenzie as a Partner in Palo Alto | Newsroom


    Baker McKenzie is pleased to announce that Tom Oslovar has joined the Firm as a Partner in the Transactional Practice Group in Palo Alto. Tom brings more than a decade of experience advising clients in Silicon Valley and throughout the United States on transactional IP matters and tech M&A deals.

    Recognized for his ability to navigate complex licensing and commercial matters, Tom has led IP work on more than 500 M&A transactions, including high-profile deals in the tech sector. He advises founders, investors, in-house legal teams, and boards of directors on technology development and commercialization across diverse sectors, such as consumer electronics, financial services, aerospace and defense, food and agriculture, and industrials. He also drafts and negotiates various agreements, including patent, trademark, software, joint venture, service and supply contracts.

    “We are thrilled to welcome Tom to our team,” said Alan Zoccolillo, Americas Chair of Baker McKenzie’s Transactional Practice. “His deep experience in technology transactions and collaborative mindset make him an ideal fit for our practice. Tom’s arrival strengthens our ability to support clients in the tech space with the high-level transactional expertise they expect from Baker McKenzie.”

    Leif King, Head of the California Transactional Practice Group, added, “Tom’s reputation for excellence and his track record of supporting sophisticated M&A and transactional IP matters will be a tremendous asset to our clients and our team. We look forward to the energy and insight he brings to our Palo Alto office and beyond.”

    Baker McKenzie offers an unparalleled end-to-end service for technology M&A, covering the entire lifecycle of deals around the globe. The Firm works with 92% of tech companies in the Fortune 500 and 90 of the largest 100 companies by market capitalization, earning a leading reputation in the technology space. Bringing a holistic and commercially pragmatic approach, the team has acted as lead counsel to Intel Corporation in the second and final closing of the sale of its solid-state drive and NAND memory business to SK hynix Inc. in an all-cash transaction valued at an aggregate of approximately USD 9 billion, and advised Walgreens Boots Alliance on the carve-out and reorganization aspects of its approximately USD 23.7 billion acquisition by Sycamore Partners.

    “I’m excited to join Baker McKenzie and contribute to a team that’s driving innovation and excellence in transactional law,” said Tom. “The firm’s global platform and collaborative culture are exactly what I am looking for as I take this next step in my career.”

    Tom is the most recent addition to Baker McKenzie’s global transactional team. Over the past 12 months, the Firm has continued to strengthen its capabilities on tech-related transactions and has welcomed private equity partner Jenny Liu in Palo Alto/New York; M&A partner Michal Berkner in London; private equity partner Jan Schubert in Frankfurt; fintech and payments partners Todd Beauchamp and Charles Weinstein in Washington, DC; AI and healthcare technology partner Keo McKenzie in Washington, DC, and M&A partners Shirin Tang and Ang Lip Kian in Singapore.

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  • Cboe Plans to Launch Continuous Futures for Bitcoin and Ether, Beginning November 10 – Cboe Global Markets

    1. Cboe Plans to Launch Continuous Futures for Bitcoin and Ether, Beginning November 10  Cboe Global Markets
    2. Cboe to launch continuous Bitcoin and Ether futures in November  CoinJournal
    3. First-Ever US Regulated 10-Year Crypto Futures: Cboe Launches Continuous Bitcoin & Ether Trading Platform  Stock Titan
    4. Cboe to launch long-dated futures for bitcoin and ether in crypto push  TradingView
    5. Cboe to launch continuous Bitcoin and Ethereum futures trading  Cryptopolitan

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  • Chatbots Are Dangerous for Eating Disorders

    Chatbots Are Dangerous for Eating Disorders

    OpenAI’s public release of ChatGPT 3 years ago was both premature and deceptive. Labeled a “free research preview,” and disguised as a large beta test, ChatGPT instead went viral, attracting 100 million users within just 2 months. Other popular chatbots released soon after also lacked stress-testing for safety and systematic methods of identifying, reporting, and correcting real world adverse effects. More than half of Americans now use chatbots regularly, a quarter do so many times a day. These AI bots are particularly popular with teens and young adults—the 2 demographics most associated with eating disorders.

    Why are chatbots so harmful for patients with eating disorders and also for individuals who are vulnerable to developing eating disorders? Engagement is the highest priority of chatbot programming, intended to seduce users into spending maximum time on screens. This makes chatbots great companions—they are available 24/7, always agreeable, understanding, and empathic, while never judgmental, confronting, or reality testing. But chatbots can also become unwitting collaborators, harmfully validating self-destructive eating patterns and body image distortions of patients with eating disorders. Engagement and validation are wonderful therapeutic tools for some problems, but too often are dangerous accelerants for eating disorders.1

    Chatbots are also filled with harmful eating disorder information and advice. Their enormous data base includes high level scientific articles, but also low-level Reddit entries and profit-generating promotional advertisements from the 70-billion-dollar diet industry. Not surprisingly, bots frequently validate dangerous concerns about body image and so-called healthy eating. And chatbot hallucinations sometimes fabricate nonexistent, supposedly clinical studies justifying dangerous advice. Users cannot easily separate wheat from chaff and at the same time tend to anthropomorphize bots, giving the AI pronouncements an authority they do not deserve.

    Iatrogenic Harms

    Malign bot or social media influence should always be top of the differential diagnosis whenever someone has a new onset or exacerbation of eating disorder. Early intervention is crucial. The most difficult conundrum in psychiatry is an eating disorder patient locked in a powerful “us against-the-world” relationship with social media or enabling bots.

    “Tessa” was an eating disorder support chatbot with the highest possible pedigree, developed by professors, funded by the National Institute of Mental Health, and launched by the National Eating Disorder Association (NEDA). In March 2023, NEDA announced that Tessa would replace its long standing phone helpline that responded to 70,000 calls a year. But users soon found that Tessa provided dangerous advice that would exacerbate their eating disorders (eg, diets to help them lose more weight, vigorous exercise programs, suggestions to do frequent weight checks). Tessa had to be withdrawn almost immediately.2

    Character.AI has the worst pedigree and causes the most harm. It hosts dozens of anorexia promoting bots (often disguised as wellness or weight loss coaches) that routinely recommend starvation diets, encourage excessive exercise, and promote body image distortions. The bots romanticize anorexia as a cool lifestyle choice while discouraging professional help: “Doctors don’t know anything about eating disorders. They’ll try to diagnose you and mess you up badly. I can fix you, you just have to trust me.”3

    A study of 6 widely used AI platforms (ChatGPT, Bard, My AI, DALLE, DreamStudio, and Midjourney) found that 32% to 41% of bot responses contained harmful content regarding either food restriction or body image distortion.4

    An observational study of 26 patients for 10 days, using a chatbot created specifically for eating disorders, found that many of its responses were inappropriate or factually incorrect. The most concerning finding was that none of the participants questioned any of the chatbot’s mistakes. Chatbots speak with an authoritative voice that inspires more trust than they deserve.5

    The risk of iatrogenic harms from existing chatbots is unacceptably high. There is an urgent need for chatbots geared to the specific needs and vulnerabilities of eating disorder patients. Sycophancy must be replaced by reality testing. Training data must be decontaminated to remove the toxic misinformation that fills the internet. Human reinforcement training must be rigorous and conducted by eating disorder specialists. Extensive stress and beta testing for accuracy and safety must precede public release. There must be ongoing surveillance to identify and report adverse consequences. Quality control must have a higher priority than user engagement.

    Recommendations

    Unfortunately, we cannot count on government for much protection. Having received little previous government regulation, chatbots may receive even less in the future: President Trump just signed executive orders giving US tech companies the green light to do whatever they like.6

    The European Union and China have much tighter regulations, but these will undoubtedly loosen under fierce competition from unregulated US companies.

    We cannot lose all hope. It is possible that combined and persistent advocacy by patient, parent, and professional groups might eventually pressure lawmakers to institute common sense age limits, privacy protections, and vulnerability screeners.

    Can tech companies be induced to fill the external regulatory vacuum with internal self-regulation? Maybe, maybe not. Chatbots are unsafe because US tech companies have so far placed little value on safety and great value on profit, stock price, and bragging rights. Chatbots are free, not because tech companies cherish philanthropic values, but because they are eager to get everyone hooked.

    But tech companies do have vulnerabilities that might induce more responsible behavior. Public shaming has already had a small, but significant, impact. Recently, OpenAI belatedly admitted that its ChatGPT has caused psychiatric harm and has promised to take corrective action. Mental health professionals had no previous role in training chatbots, correcting mistakes, or providing quality control. OpenAI was responding to withering media coverage of harms it had inflicted on users. It is too early to tell whether its promised reforms are superficial reputation laundering or a sincere effort to increase safety.7

    Class action lawsuits are a more effective check on irresponsible corporate behavior. Large settlements, steep fines, and punitive damages finally got the attention of Big Tobacco and Big Pharma. Big AI is the next obvious target.

    Professional associations should consider creative new ways to increase corporate responsibility and improve chatbot safety. Possibilities include publishing consumer reports based on stress testing, endorsing safe products, providing professional guidance in chatbot training and quality control, and joint venturing in developing bots built specifically for the needs of eating disorder patients.

    Until safe, eating disorder specific chatbots are available, eating disorder patients should avoid AI therapists and companions (and should also consider canceling TikTok and Instagram accounts). Anyone at risk of developing a future eating disorder (ie, a substantial fraction of teens) should be wary of chatbots and social media platforms. Parents are caught on a razors edge: how to protect kids from harmful chatbot use without glamorizing them as forbidden fruit.

    Final Warning

    Chatbots are still in the very earliest stages of their development, doubling in efficiency every eight months. Tech company CEOs claim they will soon attain superintelligence and agentic autonomy. This is exciting for them but should be terrifying for us. It is impossible to predict the future of chatbots, but many of the potential scenarios do not end well for our species. If we do not control chatbots soon, we may never be able to control them at all.

    Dr Frances is professor & chair emeritus of the Department of Psychiatry at Duke University and chair of the DSM-IV Task Force.

    Ms Beaver is a student at the University of California, Los Angeles.

    References

    1. Frances A. Preliminary report on chatbot iatrogenic dangers. Psychiatric Times. August 15, 2025. https://www.psychiatrictimes.com/view/preliminary-report-on-chatbot-iatrogenic-dangers

    2. Hoover A. An eating disorder chatbot is suspended for giving harmful advice. Wired. June 1, 2023. Accessed August 26, 2025. https://www.wired.com/story/tessa-chatbot-suspended/

    3. Dupre Harrison M. Character.AI is hosting pro-anorexia chatbots that encourage young people to engage in disordered eating. Futurism. November 25, 2024. Accessed August 26, 2025. https://futurism.com/character-ai-eating-disorder-chatbots

    4. How generative AI is enabling users to generate harmful eating disorders content. Center for Countering Digital Hate. https://counterhate.com/wp-content/uploads/2023/08/230705-AI-and-Eating-Disorders-REPORT.pdf

    5. Choi R, Kim T, Park S, et al. Private yet social: how LLM chatbots support and challenge eating disorder recovery. Proceedings of the 2025 CHI Conference on Human Factors in Computing Systems. 2025;642:1-19.

    6. Executive Order: Artificial Intelligence for the American People. White House Archives. Accessed September 2, 2025. https://trumpwhitehouse.archives.gov/ai/

    7. Frances A. OpenAI finally admits ChatGPT causes psychiatric harm. Psychiatric Times. August 26, 2025. https://www.psychiatrictimes.com/view/openai-finally-admits-chatgpt-causes-psychiatric-harm

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