Oil prices rose and stocks fell Monday after the U.S. launched its first military action in a month against Iran, striking Iranian rocket launchers on the Strait of Hormuz on Sunday. Brent crude, the international standard, rose 3.2% to $90.91 per barrel. The S&P; 500 fell 0.4%, the Dow Jones Industrial Average fell 348 points, or 0.7%, and the Nasdaq fell 0.3%. Energy stocks broadly gained ground, with Exxon Mobil up 2.9% and Chevron up 3%.
The Strait of Hormuz accounts for about 20% of the world's oil shipments, and the war has curtailed traffic there. The national average for gasoline in August has been above $4 per gallon every day in August for the first time ever, according to AAA, making it the most expensive August at the pump on record. Brent swung between $72 and $102 last month amid rising and falling hopes for a deal to end the war. The United Arab Emirates also said it intercepted an Iranian drone over its waters on Monday.
Higher energy prices have fueled already stubbornly high inflation, which remains well above 3%, far beyond the Federal Reserve's 2% target. That has weighed on household spending and consumer confidence and given the Fed a more complicated path for interest rate policy. Wall Street expects the central bank to raise interest rates at least once before the year ends. The two-year Treasury yield remained at 4.34%, up significantly from about 3.50% at the beginning of 2026, while the 10-year yield rose to 4.76%.
What remains unknown is whether the renewed strikes signal a broader escalation or a temporary disruption. The job market remains resilient but is showing signs of weakening, and any rate increase to cool inflation also risks hurting jobs. Later this week, the U.S. reports August jobs data after July payrolls stalled unexpectedly with 23,000 jobs cut and revisions slashed another 103,000 jobs from May and June.