US Stocks Plunge as Iran Conflict Escalates Oil Prices

The US stock market experienced losses on Monday following the country's first military action against Iran in over a month. The S&P 500 index fell 0.4%, while the Dow Jones Industrial Average dropped 305 points, or 0.6%. Energy stocks were an exception to the losses, with Exxon Mobil rising 1.5% and Chevron increasing by 1.4%.

The US military action against Iran targeted Iranian rocket launchers in the Strait of Hormuz, a key shipping route that accounts for approximately 20% of global oil shipments. The incident has led to higher oil prices, with Brent crude rising 2.8% to $90.58 per barrel on Monday.

The escalating tensions between the US and Iran have also contributed to increased inflation concerns. The national average gasoline price in August has surpassed $4 per gallon for the first time ever, according to AAA data. Higher energy prices have fueled stubbornly high inflation, which remains above 3% and is far beyond the Federal Reserve's 2% target.

The Fed's interest rate policy is now under scrutiny, with Wall Street expecting a rate hike before the year ends in an effort to cool inflation. On September 11, the Fed will release its next inflation update, just days ahead of its meeting to determine interest rate policy.