The S&P 500 remained little changed on Monday, as a spike in oil prices from renewed U.S.-Iran fighting overshadowed gains in Nvidia. The benchmark index struggled for direction despite a rally in AI-linked shares, reflecting crosscurrents between geopolitical risk and tech optimism.
Crude climbed after the latest outbreak of hostilities between the U.S. and Iran, injecting uncertainty into markets already jittery about inflation. The move higher in oil threatened to lift energy costs broadly, complicating the Federal Reserve's fight against persistent price pressures.
Nvidia shares advanced after the company unveiled a new chip aimed at the PC market, stoking fresh enthusiasm for artificial intelligence. The uplift in AI names helped futures point higher early in the session, but the rally failed to sustain broader momentum as oil's rise weighed on sentiment.
Analysts warned that sustained geopolitical tension could keep crude elevated, potentially squeezing corporate margins and consumer spending. Second-quarter earnings season looms, and investors are split on whether AI-driven gains can withstand headwinds from higher energy prices.
Some market participants argue that the oil spike is transitory and that AI spending cycles will dominate the rest of the year, downplaying the risk of prolonged conflict.