Wall Street’s major indexes hovered near record highs on Monday, as investors balanced excitement over Nvidia’s latest artificial intelligence initiative with growing skepticism that a swift resolution to the three-month-old U.S.-Iran war is imminent.
Nvidia shares climbed 4% after the company unveiled a new chip designed to bring advanced AI capabilities directly into laptops and desktop computers. The announcement, the result of a three-year collaboration with Microsoft, was framed by Nvidia CEO Jensen Huang as a pivotal moment to “reinvent the PC” for the AI era. Microsoft shares rose 2.5% in sympathy. The S&P 500 technology index gained 1.5%. The reaction across the semiconductor sector was mixed. Qualcomm tumbled 6%, while fellow PC chipmakers AMD and Intel fell 3.1% and 4.4%, respectively. Micron, however, surged 5.7% to top the $1,000 mark for the first time, extending its remarkable run.
The memory chipmaker’s shares have soared nearly 90% in May alone, reflecting optimism that an AI-driven PC refresh cycle will lift demand for its products.
Register for Tekedia Mini-MBA edition 20 (June 8 – Sept 5, 2026).
Register for Tekedia AI in Business Masterclass.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab.
Brian Jacobsen, chief economic strategist at Annex Wealth Management, captured the nuanced sentiment.
“Nvidia might expand the market, but most of its gains will come at the expense of the incumbents,” he said.
He noted that memory makers like Micron stand to benefit because their chips complement the new processors, and an AI-fueled upgrade cycle could particularly strengthen the premium end of the PC market.
Geopolitical Clouds Temper Optimism
The overall mood remained subdued, with nine of the 11 main S&P 500 sectors finishing in the red. Consumer discretionary stocks led declines with a 2% drop, as investors weighed the potential economic fallout from the Middle East conflict.
Oil prices climbed 5% after Iran’s Tasnim news agency reported that Tehran’s negotiating team had halted talks with the U.S. over attacks on Lebanon. This development added to uncertainty, even as earlier reports suggested progress toward a ceasefire extension.
At 09:40 a.m. ET, the Dow Jones Industrial Average fell 177 points, or 0.35%, to 50,855.46. The S&P 500 edged up 1.82 points, or 0.02%, to 7,581.88, while the Nasdaq Composite gained 39.52 points, or 0.15%, to 27,012.14. Software stocks rebounded from earlier selling pressure driven by AI disruption fears. ServiceNow jumped 10.7%, and IBM rose 6%, helping the software services index advance 3% and erase all losses since late January. Cadence Design Systems added 3% after launching an Nvidia-powered AI agent for chip design.
Wall Street’s main indexes ended May at record highs, supported by strong first-quarter earnings and lingering hopes for an eventual end to the Middle East conflict. Optimism around AI has been a primary driver of U.S. equity gains, but concerns over the war’s economic impact continue to loom.
Fed Watch and Upcoming Catalysts
Investors will turn their attention to Friday’s jobs report ahead of Kevin Warsh’s debut policy meeting as Federal Reserve chairman later this month. Analysts expect persistent inflation risks linked to the Iran war to complicate the central bank’s path, potentially upending the stock market rally.
“Passing the baton from one chair to the next isn’t always a smooth process. If the Strait of Hormuz doesn’t more fully open before the next Fed meeting, it’s almost certain that the Fed’s policy statement will become more hawkish,” Jacobsen warned of the delicate transition.
Traders have priced in nearly a 70% chance of a quarter-point rate hike before the end of the year.
Broadcom’s earnings on Wednesday will also be closely watched, following a strong forecast last week from AI-server maker Dell. It is expected that any positive signals from Broadcom will boost confidence in the AI supply chain.
In corporate news, Taylor Morrison Home Corp jumped 22% after Berkshire Hathaway agreed to buy the homebuilder for $6.8 billion in cash, highlighting continued interest in the housing sector despite higher interest rates.
Declining issues outnumbered advancers by a 1.65-to-1 ratio on the NYSE and 1.45-to-1 on the Nasdaq. The S&P 500 recorded 17 new 52-week highs and 10 new lows, while the Nasdaq posted 47 new highs and 29 new lows.
The session reflected a market caught between two powerful forces: the transformative potential of AI innovation and the persistent shadow of geopolitical risk. While Nvidia’s latest push into PC AI is seen as a sign of the technology’s broadening reach, the energy-driven inflation risks from the Middle East serve as a reminder that external shocks can quickly alter the investment landscape.
Analysts believe that as the week progresses, the interplay between corporate AI momentum and global developments will likely continue to dictate market direction. However, Wall Street, for now, remains near record territory, but with a cautious undertone as it awaits clearer signals from both the Fed and the negotiating table in the Middle East.