(Updates with index/price moves and geopolitical news from the first paragraph.)
US equity indexes fell after crude oil prices jumped with government bond yields amid reports that President Donald Trump will reinstate a blockade on Iranian ships transiting the Strait of Hormuz.
The Nasdaq Composite dropped 1.3% to 25,939.4, with the Dow Jones Industrial Average down 0.5% to 52,383.7 and the S&P 500 lower by 0.7% to 7,523.7 after midday Monday.
Technology led decliners, while energy topped the gainers.
US President Donald Trump said Monday that Iranian ships will no longer be able to travel through the Strait of Hormuz and that America would charge a 20% toll on eligible cargo, escalating tensions after a weekend of attacks by both nations to assert control of the critical waterway, the Associated Press reported.
The US launched several waves of heavy strikes on Iran into Monday morning, hitting some 140 targets, in response to an Iranian attack on a container ship in the Strait of Hormuz, the news report said. Iran retaliated by targeting countries across the Middle East, it added.
The front-month global benchmark North Sea Brent surged 5.1% to $79.92 a barrel, and the US West Texas Intermediate soared 5.1% to $75.06 a barrel.
US Treasury yields rose, with the 10-year up 4.5 basis points to 4.61% and the two-year jumped 6.5 basis points to 4.27%.