TLDR
- Dow, S&P 500, and Nasdaq all closed lower Monday as oil prices surged on US-Iran war fears
- Brent crude rose above $90 per barrel after Trump threatened Oman over the Strait of Hormuz
- The 30-year Treasury yield hit 5.31%, its highest level since June 2007
- US stock futures continued falling in Asian trading Tuesday, with Nasdaq futures down 0.8%
- Retail earnings from Walmart, Target, and Home Depot are due this week, with Fed minutes on Wednesday
US stocks closed lower on Monday as rising oil prices and climbing Treasury yields rattled markets. Investors grew uneasy after a memorandum of understanding between the US and Iran expired, raising fears of further conflict.
The Dow Jones Industrial Average fell 0.5%, the S&P 500 dropped 0.5%, and the Nasdaq Composite declined 0.3%. It marked the end of a three-week winning streak for the S&P 500.
Brent crude futures rose above $90 per barrel on Monday before extending gains above $91 on Tuesday. The move came after President Trump said he does not see the US-Iran war ending anytime soon.
Trump also threatened Oman with military action if the country interfered with the Strait of Hormuz. The strait is a key route for global oil shipments, and any disruption there could have wide effects on energy supply.
BREAKING: President Trump threatens to bomb Oman if they “get in the way” of US efforts to reopen the Strait of Hormuz and end the war with Iran.
“If Oman gets in the way, we’ll bomb the s*** out of them,” President Trump said.
— The Kobeissi Letter (@KobeissiLetter) August 17, 2026
Iranian media reported that Iran had seized a UAE-owned oil tanker, adding to the tension in the region. The news kept pressure on markets as traders assessed the risk of the conflict widening.
Treasury Yields Climb to Levels Not Seen in Nearly Two Decades
Energy stocks were the only S&P 500 sector to gain on Monday, rising 0.9%. Most other sectors fell, with communications services and consumer staples among the worst performers.
Rising oil prices pushed Treasury yields higher. The 30-year yield climbed 5 basis points to close at 5.31%, its highest level since June 2007. The 10-year yield also moved higher.
Higher energy costs have raised concerns about renewed inflation. That could make it harder for the Federal Reserve to cut interest rates, complicating its policy outlook.
The Fed held its benchmark rate steady at 3.50% to 3.75% at its July 28 to 29 meeting. The decision was divided, with three policymakers voting in favor of a rate hike instead.
Retail Earnings and Fed Minutes in Focus
US stock futures continued lower in Asian trading on Tuesday. S&P 500 futures fell 0.4%, Nasdaq 100 futures dropped 0.8%, and Dow Jones futures were down 0.1%.
Investors are now turning their attention to a busy week of retail earnings. Walmart, Target, and Home Depot are all set to report quarterly results.
The reports are expected to give a clearer picture of how US consumers are holding up. July retail sales and employment data both came in weaker than expected, raising questions about spending trends.
The Federal Open Market Committee meeting minutes are due Wednesday. They are expected to give more detail on where Fed officials stand on the debate over interest rates.
Markets will be watching both the earnings and the Fed minutes closely for direction heading into the rest of August.
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