US equity markets saw their recovery from last week's AI-driven selloff stall Thursday as rising tensions with Iran dampened investor sentiment. The S&P 500 and Nasdaq both retreated from recent gains, with technology stocks particularly affected by renewed geopolitical uncertainty.

Last week's market volatility stemmed from concerns about AI valuations and the broader technology sector's sustainability. The initial rebound had offered hope that investors were regaining confidence, but fresh headlines about Iran quickly reversed that momentum. Traders shifted away from risk assets as Middle East developments overshadowed corporate earnings and economic data.

The stalled recovery highlights how quickly market sentiment can shift when geopolitical risks resurface. With Iran tensions dominating headlines, investors appear to be adopting a more cautious stance, particularly in growth-oriented sectors that had led the recent rally.