US stocks opened in the red on Monday as investors balanced renewed optimism around artificial intelligence against rising geopolitical tensions in the Middle East, while oil prices climbed following fresh developments involving Iran.
The S&P 500 slipped 0.2%, while the Nasdaq Composite fell 0.1%.
The Dow Jones Industrial Average was down 132 points, or 0.26% at open.
The cautious tone came after all three major US indexes closed May at record highs.
The Nasdaq Composite gained more than 8% during the month, while the S&P 500 rose about 5% and the Dow Jones Industrial Average added nearly 3%.
Nvidia’s AI push boosts tech sentiment
Technology shares helped limit broader market weakness after Nvidia unveiled a new processor designed to bring artificial intelligence capabilities directly to personal computers.
Nvidia shares rose more than 3% in trading following the announcement.
Microsoft also gained 3.3% after both companies highlighted a three-year partnership aimed at integrating AI more deeply into PCs.
The new chip is the result of a three-year partnership with Microsoft to “reinvent the PC” for the AI era, Nvidia Chief Executive Jensen Huang said.
The launch had a mixed impact across the semiconductor sector.
Dell Technologies gained more than 8% after launching XPS 13 laptop to combat Macbook Neo, while HP rose about 4%.
Micron Technology advanced 5.6%, pushing its share price above $1,000 for the first time after a nearly 90% rally in May.
Meanwhile, some competitors moved lower.
Qualcomm fell 5.8%, while AMD and Intel declined 4% and 3%, respectively.
Software stocks also continued their recovery from earlier AI-related selling pressure.
ServiceNow and IBM each gained about 9.6% and 6.3% respectively, while Cadence Design Systems rose 2.9% after launching an Nvidia-powered AI agent for chip design.
Oil rises as Middle East tensions escalate
Despite the strength in technology shares, investor sentiment remained restrained as tensions between the United States and Iran showed signs of worsening.
West Texas Intermediate crude futures climbed about 5% to around $91 per barrel, while Brent crude rose roughly 4% to near $95.
The gains followed reports from Iranian state media that negotiators were suspending communications with the United States because of Israeli attacks in Lebanon.
Over the weekend, the US and Iran exchanged strikes, while Israel ordered troops to move deeper into Lebanon.
US Central Command said American forces intercepted two Iranian ballistic missiles overnight that were targeting US forces in Kuwait.
The developments raised concerns that diplomatic efforts to end the three-month conflict could face further obstacles.
President Donald Trump had previously indicated he was seeking a resolution, and markets had responded positively last week after the United States and Iran reached a 60-day memorandum of understanding aimed at extending the ceasefire.
Jobs report and Fed outlook in focus
Investor attention is now turning to a series of economic events that could shape expectations for monetary policy.
The closely watched nonfarm payrolls report is due on Friday and will provide fresh insight into the strength of the labor market.
The report comes ahead of Kevin Warsh’s first Federal Reserve policy meeting as chairman later this month.
Market participants are also monitoring comments from Federal Reserve officials and the Fed’s Beige Book report.
Traders currently assign roughly a 70% probability to a quarter-point interest rate increase before the end of the year.
Beyond technology and energy markets, Taylor Morrison Home shares jumped more than 22% after Berkshire Hathaway agreed to acquire the homebuilder in a $6.8 billion cash deal.
With AI optimism continuing to support equities and geopolitical tensions pushing oil prices higher, investors face a week where both corporate developments and macroeconomic data are likely to influence market direction.
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