The sell-off came after the U.S. confirmed a strike on two rocket launchers on Iran’s Larak Island, marking the first publicly acknowledged U.S. attack on Iranian positions since late July. Iranian state media also reported that Tehran retaliated by attacking U.S. bases in Jordan, raising fresh concerns that the conflict could escalate and put additional pressure on investors.
Oil markets reacted quickly to the renewed hostilities. U.S. West Texas Intermediate crude settled 2.83% higher at $85.76 a barrel, while Brent crude climbed 2.71% to $90.49. Rising oil prices also pushed longer-dated U.S. Treasury yields higher, adding to the pressure on stocks as investors weighed the potential economic impact of prolonged geopolitical tensions.
Despite Monday’s losses, Wall Street still managed to close August on a positive note. The Dow gained more than 1% during the month, marking its fifth consecutive monthly advance and its 15th positive month in the past 16. The S&P 500 rose 2.6%, while the Nasdaq gained 3.9%, with technology stocks leading much of the month’s broader gains.
For investors, the key question now is whether the latest jump in oil prices remains contained or develops into a bigger economic threat. U.S. Bank Asset Management strategist Tom Hainlin said oil prices in the $80-$90 range are unlikely to seriously damage the economy, but warned that a sustained move above $100 a barrel could become much more restrictive. With geopolitical tensions still unfolding, markets are likely to remain sensitive to every new development in the U.S.-Iran conflict.
source: cnbc
