Wall Street closed lower on Monday, with the Nasdaq Composite slipping 1.6% to 25,873.18 points while the S&P 500 fell 0.8% to 7,516.68 and the Dow Jones Industrial Average dropped 0.3% to 52,498.82. The decline was driven primarily by a retreat in technology stocks, which had earlier rallied on artificial‑intelligence optimism, and by a resurgence of geopolitical risk following President Donald Trump’s announcement that the United States is reinstating an Iranian blockade. Trump stated on Truth Social that the Strait of Hormuz would remain open for all nations except Iran, and that the United States would be reimbursed at a rate of 20% on all cargo shipped to cover safety and security costs.
The blockade announcement coincided with a sharp rise in oil prices: Brent crude futures were up 9.2% at $83.03 a barrel and U.S. West Texas Intermediate futures rose 8.9% to $77.73 a barrel. Kpler data showed confirmed vessel crossings through the Strait of Hormuz fell roughly 52% week‑on‑week from Friday to Sunday, underscoring the renewed supply‑side pressure.
In Asian markets, the South Korean KOSPI index slumped 9% on the day, extending a 25.3% decline recorded in June that pushed the benchmark into bear‑market territory. Samsung Electronics shares dropped 10.7% and SK Hynix fell 15.4%, the latter after a spectacular Nasdaq debut that saw its U.S.-listed shares tumble more than 9% on Monday.
Market strategist Michael O’Rourke of Jones Trading attributed the U.S. equity weakness to the “Asian memory sell‑off,” noting that investors are rotating out of AI‑related names into megacap stocks such as Microsoft, Amazon and Apple, while the Middle‑East headlines are bolstering the energy sector. Chief Investment Officer Alex Guiliano of Resonate Wealth Partners highlighted that the renewed Iran conflict could make inflationary dynamics more fragile, prompting lawmakers to press Federal Reserve Chair Kevin Warsh for a clearer roadmap on handling geopolitical uncertainty.
Federal Reserve Governor Christopher Waller warned that a higher inflation reading this week would be treated as a signal rather than noise, emphasizing that recent oil price spikes could limit the Fed’s breathing room. The central bank’s semi‑annual monetary policy report, released on Friday, reiterated its commitment to price stability and its readiness to act forcefully if inflation expectations rise.
Investors are also looking ahead to key U.S. consumer‑price and producer‑price inflation data later in the week, which will influence expectations for monetary policy. The second‑quarter earnings season is set to begin, with major banks—including JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, Citi, Morgan Stanley and BNY Mellon—scheduled to report on Tuesday and Wednesday, followed by cross‑sector heavyweights such as Johnson & Johnson, UnitedHealth, GE Aerospace and Netflix later in the week.