U.S.-Iran tensions are impacting markets, with Brent crude futures rising to $89.22 a barrel amid flared hostilities. Iranian strikes resulting in the deaths of at least two U.S. soldiers and traffic disruption through the Strait of Hormuz have dimmed ceasefire prospects, potentially leading to long-term oil market disruption and rising gas prices.

In the tech sector, Alibaba previewed a new AI model, positioning itself among leading developers like Anthropic. This follows other advanced AI releases from Chinese firms, raising concerns in the U.S. Alibaba's U.S.-listed shares climbed 4.7%. Chip stocks initially rose on the PHLX Semiconductor Index but pared gains, ending up 0.6%, despite worries that China's AI progress could affect chip demand. Intel shares rose 2.1% ahead of its quarterly results.

Major indexes saw declines, with the S&P 500 down 0.2%, the Nasdaq slightly lower, and the Dow Jones Industrial Average falling 0.6% to 51,839. The sustainability of the AI boom, reliant on large contracts between chip suppliers, data centers, and AI developers, faces uncertainty. A potential ebb in AI demand could challenge investors and creditors banking on these agreements.