U.S. stocks fell Monday at the closing bell as escalating tensions between the United States and Iran, centered on renewed attacks around the Strait of Hormuz, sent oil prices sharply higher and rattled investor sentiment. The Dow Jones Industrial Average dropped 557.37 points to 48,941.19, while the S&P 500 declined 29.37 points to 7,200.75 and the Nasdaq Composite slipped 46.64 points to 25,067.80.
The selloff followed reports that Iranian forces launched missile and drone attacks targeting U.S. and commercial vessels, threatening a fragile ceasefire and disrupting one of the world’s most critical oil transit routes. Iran also attacked a crucial United Arab Emirates oil port on the Gulf of Oman. The UAE uses the oil hub of Fujairah to pump oil and bypass the Strait of Hormuz. "We reserve the right to a full and legitimate response to attacks," the U.A.E. foreign ministry said.
Oil futures surged 3.13% to $105.13, extending a broader rally that has taken prices to multi-year highs. The spike reflects mounting concerns that restricted flows through the Strait of Hormuz, through which a significant portion of global oil supply passes, could tighten markets further. Analysts warned that even modest disruptions could ripple through energy markets and broader inflation expectations.
The rise in global tension was also reflected in volatility gauges, with the CBOE Volatility Index climbing 7.35% to 18.24. Meanwhile, gold prices fell 2.49%, suggesting some investors rotated away from safe havens amid shifting expectations around interest rates and dollar strength.
Looking ahead, investors will closely monitor developments in the Middle East alongside upcoming U.S. economic data, including the April jobs report scheduled to be released on Friday, for further direction. Any escalation in the Iran war, or disruption to energy flows, promises to drive volatility across asset classes.