Oil Surge, Chip Rout Drag Markets Lower – US Market Wrap

A standoff between the US and Iran lifted oil prices, with stocks and bonds both falling after clashes around the Strait of Hormuz raised concerns over disruptions to energy supplies that could fuel inflation. Those worries snapped back-to-back gains in the S&P 500, which also declined amid a selloff in chipmakers. Brent crude topped $83 after President Donald Trump said the US would restart a blockade on Iranian ships transiting Hormuz and impose charges on other cargo passing through the waterway.

Money markets priced in around a 50% chance of a Federal Reserve rate hike in July, as Governor Christopher Waller said policymakers may need to tighten further to contain price pressures.

The US and Iran exchanged fresh strikes overnight into Monday, escalating tensions over the key shipping route at the center of the renewed conflict. Uncertainty over flows through Hormuz dashed hopes for a near-term normalization in traffic, driving the biggest jump in oil prices since April. The renewed geopolitical strain comes as investors prepare for the start of earnings season, with growing unease over whether massive AI-related spending will justify valuations.

Meanwhile, falling gasoline prices likely weighed on the upcoming CPI print, expected Tuesday to show its first monthly decline since 2020, though Wednesday’s PPI may highlight ongoing upstream inflation pressures. Fed Chair Kevin Warsh is also set to make his first congressional appearances on both days.