US stocks fell on Monday as renewed fighting between Washington and Tehran, a proposed naval blockade of Iran and uncertainty over the Strait of Hormuz pushed oil prices sharply higher and weakened demand for riskier assets.The technology-heavy Nasdaq Composite led the retreat, dropping 1.55 per cent to 25,873.18. The S&P 500 declined 0.79 per cent to 7,515.34, while the Dow Jones Industrial Average lost 138.37 points, or 0.26 per cent, to close at 52,498.64.
Equity futures had pointed lower before the opening bell after President Donald Trump said the United States would reinstate restrictions on maritime traffic entering and leaving Iranian ports. The blockade is scheduled to resume at 8pm GMT on Tuesday, reversing a measure lifted in mid-June during an attempt to stabilise shipping and energy flows.
Trump also proposed charging 20 per cent on cargo transported through the Strait of Hormuz in exchange for US protection. The announcement intensified confusion over how such a fee would be administered in an international waterway and whether other governments, shipping companies and maritime regulators would accept it.
The International Maritime Organization maintained that passage through international straits should remain free. Iran rejected Washington’s claim of authority over the route, while conflicting statements emerged over whether the channel remained fully open to commercial traffic.
The Strait of Hormuz is the main maritime gateway for oil and liquefied natural gas exports from Gulf producers. Even limited disruption can increase freight rates, insurance costs and energy prices because tankers must pass through a narrow corridor vulnerable to missiles, drones, mines and vessel seizures.
Brent crude rose 9.6 per cent at one stage to $83.30 a barrel, while West Texas Intermediate climbed 9.4 per cent to $78.14. The advance reflected fears that renewed military operations could restrict shipments from the Gulf or force operators to suspend voyages through the area.
About 20 vessels had passed through the strait over a 24-hour period despite Iran’s declaration that the channel was closed. Tanker movements nevertheless remained below normal levels, and several ships were reported to be waiting outside the passage or operating without publicly visible tracking signals.
Higher oil prices revived concerns that energy costs could complicate the inflation outlook and delay any easing of monetary policy. The yield on the benchmark 10-year US Treasury note rose to about 4.62 per cent as bond prices fell.
Technology and semiconductor companies suffered some of the heaviest losses. Investors reduced exposure to highly valued growth shares as borrowing costs increased and uncertainty spread from Asian markets, where chipmakers recorded steep declines.
South Korea’s Kospi fell nearly 9 per cent during the session. SK Hynix and Samsung Electronics were among the major casualties, reinforcing concerns that the global artificial intelligence trade had become vulnerable to profit-taking and geopolitical shocks.
Shares of several US semiconductor companies also dropped. SanDisk, Marvell Technology and Intel fell by more than 6 per cent, while declines in Nvidia and Micron Technology added pressure to the Nasdaq.
Energy producers moved in the opposite direction as crude prices strengthened, helping limit losses in the Dow and parts of the S&P 500. Airlines and other fuel-intensive businesses weakened on expectations that operating costs could rise if the confrontation persists.
The market reaction followed another exchange of attacks involving US and Iranian forces around the Gulf. Washington launched strikes on Iranian targets, while Tehran reported attacks against US-linked military facilities and regional infrastructure.
Military activity was reported around southern Iran, including areas near Bandar Abbas, Abadan and Qeshm Island. Gulf governments said their air-defence systems had intercepted missiles and drones, underscoring the risk that the conflict could extend beyond the two main combatants.
Investors were also preparing for June consumer inflation figures, major bank earnings and congressional testimony from Federal Reserve chair Kevin Warsh. The oil surge has raised the possibility that policymakers may retain higher interest rates for longer or consider further tightening if energy-driven price pressures spread through the economy.
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