US-Iran Conflict Sparks Market Downturn as Oil Prices Soar

US military strikes on Iranian sites in the Strait of Hormuz triggered a downturn in stocks and an uptick in oil prices, marking the first military action by the US against Iran in over six months. The S&P 500 index fell 0.3%, while the Dow Jones Industrial Average dropped 0.7%. Energy stocks, however, saw gains, with Exxon Mobil rising 2.7% and Chevron increasing by 2.1%. The price of Brent crude oil rose 2.7% to settle at $90.49 per barrel on Monday.

The US-Iran conflict has had a significant impact on the global economy, particularly in terms of energy prices. The Strait of Hormuz accounts for about 20% of the world's oil shipments, and curtailed traffic has led to higher energy costs. This, in turn, has fueled inflation, which remains above 3%, far beyond the Federal Reserve's 2% target.

The Fed faces a challenging decision as it prepares to raise interest rates at its next meeting on September 11. While there is a 66% chance of a rate hike, Fed Chair Kevin Warsh warned that inflation remains too high and may necessitate further action. The jobs market is also under scrutiny, with the US set to report August employment data later this week.