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U.S. stocks slip as crude surge revives inflation, rate-hike fears

Markets are pricing a 65.9% chance the Fed raises rates by 25 basis points at the September meeting, with Iran-Strait of Hormuz tensions supporting higher oil prices.

Reported · Written up by our desk · Trade & Tariffs

U.S. stocks fell on Monday as a war-related jump in crude prices rekindled inflation concerns and increased expectations for tighter monetary policy, according to Reuters via LiveMint Markets. Trading opened after Federal Reserve Chair Kevin Warsh struck a more hawkish tone at the Jackson Hole Symposium, reaffirming the central bank's inflation targets.

The sell-off weighed on investor risk appetite, while spiking oil prices pushed benchmark U.S. Treasury yields higher. The market also saw few bright spots, with energy shares and semiconductors showing rare areas of strength.

Iranian President Masoud Pezeshkian said Tehran remains focused on a negotiated solution, but heightened airstrike exchanges and mounting hostilities following U.S. President Donald Trump's costly economic sanctions have fueled concerns. Reuters noted that the protracted impasse and the related closure of the Strait of Hormuz could amplify upward pressure on energy prices into broader, systemic inflation.

All three major U.S. indexes declined, with the Dow down 306.71 points, or 0.57%, to 53,253.28, the S&P 500 down 27.95 points, or 0.36%, to 7,683.81, and the Nasdaq Composite down 81.08 points, or 0.31%, to 26,321.34. Reuters added that CME's FedWatch tool puts the likelihood of a 25-basis-point rate hike at 65.9% for the conclusion of September's monetary policy meeting.

Latest closeWTI crude $83.44 ▼0.1%|S&P 500 7,711.76 ▼0.2%|Nasdaq Comp. 26,402.42 ▼0.5%

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