A chip-stock rebound lost steam Monday as artificial-intelligence anxieties and Mideast tensions weighed on markets.

Major U.S. stock indexes edged lower, with the Dow industrials leading losses. The Dow dropped 0.6%, or 307 points, while the S&P 500 fell 0.2%. The Nasdaq composite ended slightly lower, declining less than 0.1%, after rising more than 1% in morning trading.

Shares of semiconductor companies and other names linked to the AI infrastructure build-out regained some ground. Some stocks that fell by double digits last week, including Micron Technology, Sandisk and Seagate Technology, advanced more than 1% Monday.

The gains come despite Alibaba previewing its new artificial-intelligence model -- the second time in a week that China has flexed its advances in AI.

In recent weeks, investors have taken a second look at the semiconductor shares and other highflying AI stocks, said Jeff McClean, chief executive officer of Solidarity Wealth. "Short term, I think the party goes on," he said. "Longer term, there's some concern there -- can those earnings keep up continually?"

Oil prices rose, with Brent crude futures advancing 1.3% to $89.22 a barrel and the U.S. benchmark rising 0.9% to $83.23. Earlier in the session, Brent crude futures jumped past $90 a barrel after fighting between Washington and Tehran intensified over the weekend. They pared gains after Iran said it had received proposals from mediators to prevent further escalation.

Longer-lasting tensions with Iran could lift the price of oil and raise concerns about higher inflation, McClean noted. Benchmark 10-year Treasury yields rose 0.055 percentage point to 4.597%.

Shares of Elon Musk's SpaceX suffered their seventh straight day of declines, falling 3.3% to $119.85. SpaceX, whose stock is now well below its $135 offering price from June, on Monday dropped below Meta Platforms to become the eighth-largest company by market value.

Investors in coming days will parse a number of much-awaited corporate earnings reports, including Alphabet, Tesla, IBM and Intel. Otherwise, it is a quiet week for economic data and Federal Reserve speakers, with policymakers in a blackout period ahead of next Wednesday's interest-rate decision.

Write to Hannah Erin Lang at hannaherin.lang@wsj.com

(END) Dow Jones Newswires

July 20, 2026 16:42 ET (20:42 GMT)

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