U.S. stocks fell Monday as a fresh jump in crude oil prices, tied to renewed U.S.-Iran military exchanges, revived inflation fears and raised the odds of a Federal Reserve rate hike. The S&P 500, Dow and Nasdaq all closed lower, with energy the only gaining sector and utilities the biggest laggard.
The S&P 500 lost 27.95 points, or 0.36%, to close at 7,683.81 on Monday. The Dow Jones Industrial Average fell 306.71 points, or 0.57%, to 53,253.28, while the Nasdaq Composite lost 81.08 points, or 0.31%, to 26,321.34.
Oil surge revives inflation fears
The selloff traces to renewed military exchanges between Washington and Tehran. The U.S. conducted airstrikes targeting Iranian missile launchers on Larak Island, a strategic position in the Strait of Hormuz, and Iran retaliated with missile and drone strikes aimed at U.S.-linked locations in Jordan and the United Arab Emirates.
Iran's President Masoud Pezeshkian said Tehran is still seeking a negotiated solution, after days of increased airstrike exchanges and mounting hostilities following President Donald Trump's implementation of costly economic sanctions. Brent crude surged more than 3% to above $90 to $91 per barrel, while West Texas Intermediate gained to around $86, fueling fears that pressure on energy prices could spread into broader inflation.
Fed rate-hike odds climb
The move follows a hawkish tone from Federal Reserve Chair Kevin Warsh, who reaffirmed inflation targets in a keynote speech at the Jackson Hole Symposium on Friday. Financial markets are now pricing in a 65.9% likelihood of a 25-basis-point rate hike at September's Fed meeting, according to CME's FedWatch tool. According to Reuters: "August wasn't about tech", said Paul Nolte, chief executive officer at Horizon Investment Services.
Energy gains as utilities and PG&E slide
Among the S&P 500's 11 major sectors, energy shares were the biggest gainers on the crude rally, while utilities were among the biggest laggards after an amendment to a California Senate bill did little to resolve grid operators' exposure to wildfire liabilities. Halliburton and Valero Energy gained 1.9% and 1.2%, respectively.
In utilities, PG&E slid 18.2%, setting a course for its largest percentage loss in over six years. Nvidia rose 0.9%, while chipmakers Sandisk and Qualcomm added 1.2% and 3.4%.
All three indexes remain on track for monthly gains despite Monday's losses.
Sources: Investing.com/Reuters, Crypto Briefing
Trading involves risk.
Risk Disclaimer
