US stocks fell on Monday morning as oil prices rose above $100 a barrel after President Trump announced a new closure of the Strait of Hormuz during a fragile ceasefire with Iran.
The Dow Jones Industrial Average was down 354 points, or 0.7%, as of 9:35 a.m. EST, while the S&P 500 and Nasdaq were down 0.3%.
Brent crude futures rose 7.1 percent to $101.95 per barrel. West Texas Intermediate crude rose 6.7% to $95.59. Gasoline prices nationally averaged $4.13 per gallon, according to AAA.
After talks between the United States and Iran failed to reach an agreement over the weekend, Trump announced on Sunday that the United States would launch its own blockade of the strait, a vital sea route in the Persian Gulf that passes through 20% of the world’s oil.
“With immediate effect, the US Navy, the best in the world, will begin the process of blockading any and all ships attempting to enter or exit the Strait of Hormuz,” he wrote in his article. Social function of truth.
He also made new threats against Tehran, writing that any Iranian forces that fired on ships would “fly to hell,” that the United States was “fully prepared,” and that our military would wipe out what little Iran had left, if necessary.
Investors had hoped for signs of a deal to end the war in the Middle East, which has already caused the worst energy supply outages in history and pushed US inflation to its highest level in two years.
US Central Command announced that it would begin blocking traffic through Iranian ports starting at 10 a.m. EST on Monday. It said it would not prevent ships using the waterway from traveling to non-Iranian ports.
“Investors are now back to the drawing board trying to reassess the fair value of stocks after it has become clear that there is no end in sight to the conflict in the Middle East,” Clark Belin, president and chief investment officer at Bellwether Wealth, said in a note on Monday. “Any time there is a repricing in the markets, we see volatility.”
“Clearly there will be more ado about this waterway between the US and Iran this week, and that could unsettle markets and extend this stock market correction.”
Vice President J.D. Vance left Islamabad, Pakistan, without reaching an agreement after leading the US delegation through 21 hours of talks with their Iranian counterparts.
The representative said that Iran refused to commit that it would not seek to obtain a nuclear weapon, and demanded that the Middle Eastern country take control of the Strait of Hormuz, war reparations, and the release of frozen assets.
Trump is now weighing whether to resume limited strikes on Iran, according to the Wall Street Journal, concerning investors who had hoped the two-week ceasefire would last.
In an interview with Fox News host Maria Bartiromo on Sunday, the commander-in-chief also seemed unwilling to commit to lower oil prices any time soon — even saying they could jump higher by the midterm elections.
“Well, eventually it will be less,” he said. “No, it may not happen at first, but it will end when this is all over.”
Asked whether prices would fall by this fall, Trump said: “I hope so. I mean, I think so. It could happen. Or the same thing. Or maybe a little higher. But it would have to be about the same level. I think that won’t last much longer.”
Meanwhile, Goldman Sachs shares fell 3.7% on Monday despite a strong earnings report as traders focused on disappointing trading results at its fixed income unit.
Major banks, including Citigroup, Wells Fargo, JPMorgan Chase, Morgan Stanley and Bank of America, are scheduled to report earnings this week.
Bellin said in his note: “The big question for stocks in the future is whether the upcoming earnings season can be a sufficient incentive to break up the close relationship between stocks and oil, as corporate profits are what traditionally move stock prices.”
The three major US stock indexes last week saw their best gains since November after Trump announced a two-week halt in strikes with Iran and traders grew more optimistic about a more permanent end to the war.