US-Iran Tensions Spark Market Turmoil

US military action against Iran sent shockwaves through global markets on Monday, causing stock prices to plummet and oil prices to surge. The Dow Jones Industrial Average dropped 0.7%, while the S&P 500 index fell 0.3%. Energy stocks saw gains, however, with Exxon Mobil rising 2.7% and Chevron increasing 2.1%.

The US launched its first military action in a month against Iran on Sunday, striking Iranian rocket launchers on the Strait of Hormuz. This aggressive move follows a lull in activity in the US war with Iran, which has lasted over six months.

The conflict has curtailed traffic in the Strait of Hormuz, affecting about 20% of the world's oil shipments. As a result, oil prices remain high, with Brent crude rising 2.7% to settle at $90.49 per barrel on Monday.

Higher energy prices have fueled stubbornly high inflation, weighing on household spending and consumer confidence. The Federal Reserve is expected to raise interest rates in an effort to cool inflation, with Wall Street forecasting a 66% chance of a rate hike at the Fed's next meeting on September 11.