(Updates with market moves at the end of the day.)
Equities on Wall Street fell Monday, snapping a three-day winning streak for the technology-heavy Nasdaq Composite, as oil prices rallied amid a re-escalation in the US-Iran conflict.
The Nasdaq shed 1.6% to close at 25,873.2, while the S&P 500 lost 0.8% to 7,515.8. The Dow Jones Industrial Average dropped 0.3% to 52,498.6. Among sectors, tech saw the steepest decline, down 2.1%, while energy led the gainers with a 3.2% advance.
West Texas Intermediate crude was up 8.8% at $77.72 a barrel in Monday late-afternoon trade, while Brent gained 9.2% to $82.97.
The US and Iran continued to exchange airstrikes over the weekend, with Tehran targeting American military facilities across 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," President Donald Trump said in a social media post Monday, adding that the US was reinstating a blockade of Iranian shipping through the narrow waterway.
Hostilities between the US and Iran resumed recently, weeks after they signed a memorandum of understanding to end their war that began at the end of February. The Strait of Hormuz is the world's most important chokepoint for crude flows.
"Clearly, the risk is that this escalates to levels seen early in the war, where neighboring countries and their energy infrastructure are also targeted," ING Bank said in a report. "Escalation has slowed vessels transiting the strait to a trickle, renewing concerns over oil supply tightness through the third quarter."
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, with the two-year rate up 6.1 basis points at 4.27% and the 10-year rate rising 4.5 basis points to 4.61%.
Official data on Tuesday are expected to show that the consumer price index dropped 0.1% in June on a sequential basis and rose 3.8% annually, according to a Bloomberg-compiled consensus. Wall Street is projecting core CPI, which excludes volatile items such as food and energy, to rise 0.2% month over month and 2.9% annually.
The Federal Reserve may have to consider raising interest rates if inflation remains high, Fed Governor Christopher Waller said Monday.
"If we get another hot reading on core inflation this week, then the (Federal Open Market Committee) will need to consider tightening monetary policy in the near term," Waller said in a speech in New York. "We are at a crossroads for policy, and the appropriate action will depend on incoming data."
There's a 59% likelihood that the Fed will keep its monetary policy unchanged later this month, down from 74% a week ago, according to the CME FedWatch tool. The odds of a 25-basis-point rate increase moved to 41% on Monday from about 26% a week earlier.
The S&P 500 is heading into the second-quarter reporting cycle with consensus earnings growth projections at their highest in recent quarters, Oppenheimer Asset Management said Monday in a report.
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 quarterly results later this week. Johnson & Johnson (JNJ), UnitedHealth (UNH) and Netflix (NFLX), among others, also report this week.
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 fell 3.3%, while TriCo jumped 12%.
Gold fell 2.6% to $4,005.10 per troy ounce, while silver lost 3.9% to $57.83 per ounce.
