Oil Price Surge Triggers Wall Street Decline Amid Iran Conflict
Wall Street closed out August on a downbeat note as stocks fell due to rising oil prices after the US launched its first military action in a month against Iran. The S&P 500 index dropped 0.3%, while the Dow Jones Industrial Average declined 0.7% and the Nasdaq composite slipped 0.1%. Energy stocks, however, saw gains with Exxon Mobil increasing by 2.7% and Chevron rising 2.1%.
The US war with Iran has been ongoing for over six months, curbing traffic in the Strait of Hormuz, which accounts for about 20% of global oil shipments. The price of Brent crude rose 2.7% to settle at $US90.49 per barrel on Monday. This has pushed up petrol prices, with the national average reaching above $US4 per gallon every day of August.
The high energy prices have fueled inflation concerns, which are further complicated by the Federal Reserve's interest rate policy. The Fed is expected to raise its benchmark rate at least once before the year ends in an effort to cool inflation. The yield on the two-year US Treasury bond held steady at 4.34%, while the yield on the 10-year Treasury rose to 4.75%.