U.S. stocks traded mixed on Monday as renewed optimism around artificial intelligence and semiconductor stocks helped the Nasdaq hold in positive territory, while the S&P 500 and Dow Jones Industrial Average slipped amid fresh tensions in the Middle East.
At 9:35 a.m. EDT, the Nasdaq Composite was up 13.15 points, or 0.05%, at 26,742.31. The S&P 500 fell 10.12 points, or 0.13%, to 7,775.64, while the Dow Jones Industrial Average dropped 194.40 points, or 0.36%, to 53,538.01.
The moves came after the S&P 500 closed at a record high last week, extending its winning streak to three weeks. Investors are now balancing renewed enthusiasm for the AI trade against higher crude prices and geopolitical uncertainty.
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Technology and semiconductor stocks were providing the biggest support to the Nasdaq. Micron Technology shares rose more than 3%, while Broadcom and Nvidia also traded higher.
The gains followed reports on strong growth at AI company Anthropic. Bloomberg News reported that Anthropic's second-quarter revenue exceeded $11.5 billion, marking a sharp increase from a year earlier.
The AI optimism has also been supported by Anthropic's longer-term revenue outlook. Reuters reported that the company, which is preparing for an IPO, has forecast 2028 revenue of roughly $190 billion-$200 billion, according to two people familiar with its financials.
The broader technology sector has come under pressure in recent months as investors questioned whether huge AI investments would generate adequate returns. A strong second-quarter earnings season, however, has helped push the Nasdaq closer to record levels.
Investors will now look to Nvidia's earnings next week for fresh evidence on whether the AI-led rally has further room to run.
The gains in technology shares were offset by renewed concerns over the Middle East. Oil prices moved higher after a senior Iranian official told Reuters that Tehran would escalate tensions in the Strait of Hormuz and the wider region if diplomacy with the U.S. fails.
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West Texas Intermediate crude futures rose 0.5% to nearly $83 a barrel, while Brent crude gained 0.6% to around $89 a barrel. The developments have put the spotlight back on inflation risks. Any prolonged disruption to tanker traffic through the Strait of Hormuz could push energy prices higher and complicate the Federal Reserve's efforts to bring inflation under control.
Despite the oil jitters, recent U.S. economic data have provided some relief for investors. A relatively mild inflation reading and a surprise decline in retail sales have reduced expectations of a Federal Reserve rate hike at its September meeting. Traders are now pricing in roughly a 31% probability of a 25-basis-point hike, according to CME's FedWatch tool, down sharply from the near-even odds of a hike versus a hold seen a week earlier.
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