Oil prices climbed following the latest rise of tensions between the United States and Iran, but the moves were more modest than they were earlier in the war. US stocks, meanwhile, gave back a bit of their record-breaking rally.
The S&P 500 slipped 0.2% from its all-time high for just its second drop in 14 days after the United States seized an Iranian-flagged cargo vessel that it said had tried to evade its blockade of Iranian ports. The Dow Jones Industrial Average dipped 4 points, or less than 0.1%, and the Nasdaq composite fell 0.3%.
The price for a barrel of Brent crude oil, the international standard, climbed 5.6% to settle at $US95.48 on worries that Iran could keep petroleum pent up in the Persian Gulf if it continues to block tankers from exiting the Strait of Hormuz.
What’s happening in the Strait of Hormuz?
It's a turnaround from the prior trading day on Wall Street, when stocks soared and oil prices tumbled after Iran said Friday it was reopening the strait to commercial traffic. That enthusiasm vanished quickly after Iran closed the strait again Saturday following the US decision to press ahead with its blockade of Iranian ports.
The next big deadline is looming early on Wednesday Tehran time, when a ceasefire agreement between the US and Iran is scheduled to expire.
Still, oil prices remain well below the high points reached so far in the war. Brent crude's price briefly got above $US119 per barrel when fears were at their highest. And the S&P 500 is still above where it was before the war.
Monday's relatively muted moves suggest investors still see a possibility of a US-Iranian agreement that could get oil flowing again from the Middle East to customers worldwide. It would be in both countries' economic interests to end the war.
Oil fears fuelling share slide but profits solid
Companies with big fuel bills, including cruise ship lines and airlines, fell to some of Wall Street's larger losses following the rise in crude's cost, as they have through much of the war.
All told, the S&P 500 fell 16.92 points to 7,109.14. The Dow Jones Industrial Average dipped 4.87 to 49,442.56, and the Nasdaq composite slipped 64.09 to 24,404.39.
One big reason the US stock market has been so strong recently is the big profits that companies have been reporting for the first three months of 2026, as well as expectations for continued growth.
While reporting stronger profits for the latest quarter than analysts expected, several of the biggest US banks said last week that they see the US economy remaining resilient, particularly because of solid spending by US consumers.
It's remained so solid that analysts have even raised their profit expectations since the war began for the spring of 2026.
About 10% of companies in the S&P 500 have already reported their results for the start of 2026. Nearly nine out of 10 have delivered a bigger profit than analysts expected, according to FactSet.
If the rest of the companies in the index match analysts' expectations, overall earnings per share for S&P 500 companies will end up 13% higher than a year earlier, according to FactSet.
That's big because stock prices tend to follow the path of corporate profits over the long term.
In stock markets abroad, indexes fell in Europe following a better finish in Asia. Germany's DAX lost 1.2%, and Hong Kong's Hang Seng added 0.8% for two of the world's bigger moves.
The Associated Press
