US benchmark equity indexes were lower intraday, while oil prices jumped as President Donald Trump said Washington was reinstating a blockade of Iranian shipping through the Strait of Hormuz amid rising tensions in the Middle East.
The Nasdaq Composite was down 1.3% at 25,939.2 after midday Monday, while the S&P 500 fell 0.7% to 7,526.4. The Dow Jones Industrial Average shed 0.3% to 52,507. Among sectors, technology saw the steepest decline, while energy paced the gainers.
West Texas Intermediate crude was up 7.4% at $76.72 a barrel, while Brent gained 7.5% to $81.76.
The US and Iran continued to exchange airstrikes over the weekend, with Tehran targeting American military facilities across several Middle Eastern countries, news outlets reported. Iran's Islamic Revolutionary Guard Corps reportedly said it closed the crucial Strait of Hormuz until further notice, though the US military disputed the claim.
The strait is open and will remain so "with or without Iran," Trump said in a social media post Monday, adding that the US was reinstating a blockade of Iranian shipping through the narrow waterway.
"The USA will be, from this point forward, known as 'the guardian of the Hormuz strait,' but as such, and as a matter of fairness, will be reimbursed, at the rate of 20% on all cargo shipped," Trump said.
Hostilities between the US and Iran resumed recently, weeks after they signed a memorandum of understanding to end their war. The Strait of Hormuz is the world's most important chokepoint for crude flows.
The growing US-Iran conflict threatens to derail the recovery of global oil inventories and further diminishes the chances of a diplomatic breakthrough, Saxo Bank said in a note.
The Organization of the Petroleum Exporting Countries on Monday reduced its global oil demand growth outlook for this year while upgrading its projection for 2027.
US Treasury yields were higher intraday, with the two-year rate up 5.7 basis points at 4.27% and the 10-year rate rising 4.5 basis points to 4.61%.
In company news, First Hawaiian (FHB) agreed to acquire TriCo Bancshares (TCBK) in an all-stock deal to create one of the largest banks headquartered in the western US, with combined assets of about $34 billion. First Hawaiian shares were down 4%, while TriCo jumped 11%.
US banking giants JPMorgan Chase (JPM), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC), Morgan Stanley (MS), and Citigroup (C) are expected to report their latest quarterly financial results later this week, along with other major corporations, including Johnson & Johnson (JNJ), UnitedHealth (UNH) and Netflix (NFLX).
Gold fell 2.7% to $4,004.80 per troy ounce, while silver lost 3.7% to $57.92 per ounce.
