Wall Street near record levels as AI optimism tempers war concerns

Wall Street’s main indexes remained near record levels Monday, driven by optimism around artificial intelligence but tempered by geopolitical concerns. Nvidia shares climbed 4% after the company unveiled a new chip designed to integrate AI capabilities directly into laptops and desktops, part of a three-year partnership with Microsoft to modernize PCs. Microsoft shares also rose 2.5%, while the S&P 500 tech index gained 1.5%. The move contrasted with mixed performance in semiconductor stocks, with Qualcomm dropping 6% and AMD and Intel falling 3.1% and 4.4%, respectively. Micron surged 5.7% to $1,022, its first close above $1,000, as its memory chips support AI-driven hardware demand. Investor sentiment was split, with AI optimism offset by escalating tensions in the U.S.-Iran conflict. Oil prices jumped 5% after Iran’s negotiating team suspended talks with the U.S. following attacks on Lebanon, casting doubt on a potential war resolution. Nine of the 11 S&P 500 sectors declined, led by a 2% drop in consumer discretionary stocks. By mid-morning, the Dow Jones Industrial Average lost 0.35%, the S&P 500 rose 0.02%, and the Nasdaq Composite gained 0.15%. Software stocks rebounded from earlier sell-offs, with ServiceNow and IBM rising 10.7% and 6%, respectively, as AI-driven disruption fears eased. Cadence Design Systems added 3% after launching an Nvidia-powered AI tool for chip design. Despite the mixed performance, Wall Street ended May at record highs, buoyed by hopes of a war resolution and strong corporate earnings. Investors are now focused on Friday’s U.S. jobs report and the Federal Reserve’s upcoming policy meeting, led by new Chairman Kevin Warsh. Rising inflation risks tied to the Iran conflict could prompt a more hawkish Fed stance, potentially disrupting the market rally. Analysts estimate a near 70% chance of a quarter-point interest rate hike by year-end. Other market movers included Taylor Morrison Home Corp, which surged 22% after Berkshire Hathaway agreed to acquire the homebuilder for $6.8 billion in cash. Declining stocks outnumbered advancers on both the NYSE and Nasdaq, though the S&P 500 and Nasdaq Composite posted multiple new 52-week highs alongside some lows. Broadcom’s earnings report, due Wednesday, will also draw attention following Dell’s strong AI-server forecast.