Oil prices rise and stocks fall after US hits Iranian sites in the
Strait of Hormuz
[September 01, 2026] By
DAMIAN J. TROISE and ALEX VEIGA
Wall Street closed out August on a downbeat note Monday as stocks fell
and the price of oil rose after the U.S. launched its first military
action in a month against Iran.
The S&P 500 index fell 0.3%. The Dow Jones Industrial Average dropped
0.7% and the Nasdaq composite slipped 0.1%.
August had no shortage of turbulence for the market, but the S&P 500 and
Nasdaq each posted a gain for the month after losing ground in July and
June. The Dow, meanwhile, managed its fifth-straight monthly gain.
Monday’s losses were broad, with nearly every sector within the
benchmark S&P 500 finishing in the red. Energy stocks, though, notched
gains. Exxon Mobil rose 2.7% and Chevron rose 2.1%.
On the losing side, Edison International slumped 23.1% and PG&E fell
20.1% for the two steepest declines. That followed reports about
potential California wildfire legislation that would allow insurers to
sue utilities over related claims.
Amazon fell 2.5% after The Wall Street Journal reported that the Federal
Trade Commission and more than 20 states are preparing to sue the online
retail giant over claims the company manipulated prices on its platform.
The U.S. war with Iran remained a key focus for Wall Street. U.S. forces
struck Iranian rocket launchers on the Strait of Hormuz on Sunday.
Meanwhile, the United Arab Emirates said it intercepted an Iranian drone
over its waters on Monday.
The aggressive actions follow a lull in activity in the U.S. war with
Iran, which has lasted more than six months.
The war has curtailed traffic in the Strait of Hormuz, which accounts
for about 20% of the world’s oil shipments. Oil prices remain high after
an initial surge earlier in the war and that has made everything from
gasoline to shipped goods more expensive.
The price of Brent crude, the international standard, rose 2.7% to
settle at $90.49 per barrel on Monday. Brent fell below $80 earlier in
August but has since moved higher with no sign of an imminent end to the
war.
The national average for gasoline in August has been above $4 per gallon
every day of the month for the first time ever, according to the AAA. It
has been the most expensive August at the pump on record, outpacing even
the enormous supply chain crunch during the COVID-19 pandemic in 2022.
Higher energy prices have fueled already stubbornly high inflation. That
has been weighing on household spending and consumer confidence. It has
also given the Federal Reserve a more complicated path ahead for its
interest rate policy.
The rate of inflation remains well above 3%, which is far beyond the
Fed’s 2% target. Wall Street expects the central bank to raise interest
rates at least once before the year ends in an effort to cool inflation.
On Friday, Fed Chair Kevin Warsh said that inflation is still too high
and suggested a rate hike might be necessary in the coming months.
[to top of second column] |
Options trader Matthew Hefter works on the floor of the New York
Stock Exchange, Thursday, Aug. 27, 2026, in New York. (AP Photo/Yuki
Iwamura)
 The Fed gets its next inflation
update on Sept. 11, just days ahead of its next meeting to determine
interest rate policy. Wall Street is forecasting a 66% chance that
the Fed will raise its benchmark rate at that meeting, according to
CME FedWatch.
“While a September hike is not a foregone conclusion, we expect the
Fed to have limited tolerance for meaningful upside inflation
surprises," wrote Brock Weimer, investment strategy analyst at
Edward Jones, in a research note.
The yield on the two-year Treasury, which closely tracks
expectations about Fed moves, held steady at 4.34%, where it was
late Friday. That’s up significantly from about 3.50% at the
beginning of 2026.
The yield on the 10-year Treasury rose to 4.75% from 4.73% late
Friday. That's back up around the level seen two weeks ago when the
Trump administration took the unusual step of announcing it would
intervene in the bond market.
Any increase to interest rates that could cool inflation also risks
hurting the jobs market. Later this week, the U.S. reports August
jobs data. In July, the U.S. job market stalled unexpectedly as
employers cut 23,000 jobs. Labor Department revisions slashed
another 103,000 jobs from May and June payrolls.
Company updates helped move several stocks Monday. GameStop rose
2.9% after the video game retailer provided a preliminary
second-quarter earnings outlook above its year-ago results. Shares
of Aon slid 9.5% as the company announced that it was buying
insurance broker USI Insurance Services from private equity firm KKR
in a deal valued at $17 billion, including debt.
All told, the S&P 500 fell 25.62 points to 7,686.14. It rose 2.6% in
August and is up 12.3% so far this year.
The Dow Jones Industrial Average dropped 374.09 points to 53,185.90.
The Nasdaq fell 31.53 points to 26,370.89. The index, which is
heavily weighted with big tech stocks, posted a 3.9% gain for the
month and is up 13.5% this year.
Markets were mixed in Europe.
___
AP Business Writers Elaine Kurtenbach and Michelle Chapman
contributed to this report.
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