US stocks hover near record highs as AI optimism offsets growing war concerns

Major Wall Street indexes remained near record highs on Monday as investors balanced a fresh wave of artificial intelligence optimism led by [Nvidia](https://www.nvidia.com?utm_source=chatgpt.com) against rising uncertainty over prospects for a peace agreement that could end the three-month conflict between the United States and Iran.

Nvidia shares jumped about 4% after the company unveiled a new chip designed to run artificial intelligence applications directly on laptops and desktop computers.

The new chip is the result of a three-year partnership with [Microsoft](https://www.microsoft.com?utm_source=chatgpt.com) aimed at “reinventing the personal computer for the AI era,” according to Nvidia CEO Jensen Huang. Microsoft shares gained 2.5%.

The technology sector within the S&P 500 advanced 1.5%.

Semiconductor stocks show mixed performance

Semiconductor companies delivered mixed results:

* [Qualcomm](https://www.qualcomm.com?utm_source=chatgpt.com) fell 6%.

* [AMD](https://www.amd.com?utm_source=chatgpt.com) declined 3.1%.

* [Intel](https://www.intel.com?utm_source=chatgpt.com) dropped 4.4%.

Meanwhile, [Micron Technology](https://www.micron.com?utm_source=chatgpt.com) surged 5.7%, surpassing the $1,000 level for the first time in its history after gaining roughly 90% during May.

Brian Jacobsen, chief economist at Anx Wealth Management, said Nvidia may expand the overall market, but much of its gains could come at the expense of existing competitors.

He added that memory-chip makers such as Micron could benefit significantly because their products complement the processors used in next-generation AI-powered computers. He also noted that an AI-driven PC replacement cycle could boost demand for higher-end devices.

Oil prices weigh on sentiment

Despite support from technology stocks, investor sentiment remained cautious after oil prices climbed around 5%.

The move followed a report from the Iranian news agency Tasnim stating that Iran’s negotiating team had suspended talks with the United States in protest against Israeli attacks in Lebanon.

The rise in oil prices intensified concerns about inflation and the economic consequences of the conflict.

Market performance

As of 9:40 a.m. New York time:

* The Dow Jones Industrial Average fell 177 points, or 0.35%, to 50,855.46.

* The S&P 500 gained 0.02% to 7,581.88.

* The Nasdaq Composite rose 0.15% to 27,012.14.

Software sector recovery continues

Software stocks continued to recover from the sharp selloff seen earlier in the year amid concerns that artificial intelligence would disrupt traditional business models.

Shares of [ServiceNow](https://www.servicenow.com?utm_source=chatgpt.com) climbed 10.7%, while [IBM](https://www.ibm.com?utm_source=chatgpt.com) gained 6%.

The software services index rose about 3%, erasing all losses recorded since late January.

[Cadence Design Systems](https://www.cadence.com?utm_source=chatgpt.com) advanced 3% after launching a new AI-powered chip design agent built using Nvidia technologies.

Focus shifts to jobs data and the Fed

Investors are now looking ahead to Friday’s US employment report, which comes before the first monetary policy meeting under new Federal Reserve Chair Kevin Warsh later this month.

Concerns are growing that inflationary pressures linked to the Iran conflict could alter the outlook for equities.

Jacobsen said: “If the Strait of Hormuz is not reopened more broadly before the next Fed meeting, it is almost certain that the tone of the policy statement will become more hawkish.”

Markets are currently pricing in roughly a 70% probability of a quarter-point interest rate increase before year-end.

Earnings and a major acquisition

Attention is also turning to earnings from [Broadcom](https://www.broadcom.com?utm_source=chatgpt.com), scheduled for release on Wednesday, particularly after the strong guidance provided last week by [Dell Technologies](https://www.dell.com?utm_source=chatgpt.com) regarding demand for AI servers.

In corporate news, shares of [Taylor Morrison Home](https://www.taylormorrison.com?utm_source=chatgpt.com) jumped 22% after [Berkshire Hathaway](https://www.berkshirehathaway.com?utm_source=chatgpt.com) announced an agreement to acquire the company in a $6.8 billion all-cash deal.

Market breadth remains weak

Despite the major indexes trading near record highs, declining stocks outnumbered advancing stocks on both the New York Stock Exchange and Nasdaq, highlighting continued caution among investors amid rising geopolitical risks and higher energy prices.