NEW YORK — Energy companies posted their best single-session gain in weeks Monday as the rest of Wall Street closed lower, ending August on a note that reminded investors what the Strait of Hormuz is worth to a barrel of crude oil.
The S&P 500 fell 0.33 percent to 7,686.14. On its own that is a modest decline. Set against what drove it, the number does less work than the sector breakdown: ten of the eleven S&P 500 sectors finished in negative territory, led by utilities and communication services. The one exception was energy, which rose roughly 2 percent as Halliburton gained more than 2.5 percent, Chevron and Valero Energy each added 2 percent, and Exxon Mobil rose more than 1.5 percent. The rest of the market was selling what energy was selling.
The cause was not a jobs report or an earnings miss. It was a Sunday night military strike. U.S. Central Command confirmed that American forces hit two Iranian Revolutionary Guard Corps rocket launchers on Larak Island in the Strait of Hormuz after those launchers were observed preparing to fire rockets carrying sea mines into the waterway. It was the first acknowledged U.S. strike on Iranian territory since late July, ending a 31-night pause that markets had gradually begun to price out of the risk premium. Tehran struck back at U.S. positions in Jordan and the UAE, as Al Jazeera reported. By Monday morning, oil traders were pricing the strike as a structural disruption to a supply corridor that handles roughly 20 percent of global seaborne oil.
Brent crude for November delivery settled at $90.49 a barrel, up 2.71 percent, its highest close since early March. West Texas Intermediate settled at $85.76, up 2.83 percent. The Eastern Herald’s coverage of the Larak Island strikes traced the military exchange and the Trump administration’s threats of escalation from the moment the strikes became public.
The oil move registered in bond markets almost immediately. The 10-year Treasury yield reached its highest level since January 2025 on Monday. The reasoning was straightforward: crude at $90 means higher energy costs, higher energy costs feed into consumer prices, and persistent inflation narrows the Federal Reserve’s room to cut rates or gives it reason to raise them. The CME FedWatch tool was already showing a 60 percent probability of a rate increase at the September 16-17 Federal Open Market Committee meeting before the session opened. An oil shock does not bring that number down.
The rate question frames the entire week ahead. The ISM Manufacturing PMI lands Tuesday, the JOLTS jobs survey arrives Wednesday, and August nonfarm payrolls close out the week on Friday. Each reading carries weight for the September FOMC decision. Federal Reserve Governor Kevin Warsh had already told markets last week that rate cuts might not come until 2027. Monday’s crude spike adds an inflation argument to a thesis the bond market was already pricing.
The Dow Jones Industrial Average fell 374 points, or 0.7 percent, to 53,185.90, its sharpest single-day loss since mid-August. The Nasdaq Composite slipped 0.12 percent to 26,370.89, comparatively resilient given its technology weighting and limited direct exposure to energy costs. Monday arrived one trading day after a quieter session on August 29, when the Warsh commentary was still settling into yields. That session was cautious. This one was alarmed.
What Monday could not take away was August’s broader record. The Nasdaq gained 3 percent for the month, the S&P 500 rose 2.6 percent, and the Dow added 1.3 percent. Those gains arrived largely on the back of strong second-quarter earnings from large technology companies that carried the indexes through repeated geopolitical interruptions over the summer. Individually, each interruption looked like the one that might break the rally. None of them did. Monday was the latest. Whether it holds that pattern depends on whether the Hormuz strait remains navigable for commercial shipping.
Arab News reported that Treasury Secretary Scott Bessent signaled additional U.S. sanctions on Iran following the exchange, adding another layer of uncertainty for energy traders who have spent the summer watching pauses in the conflict harden and then collapse. The administration’s posture, striking first and threatening further escalation, has become a fixed feature of a conflict that markets have found difficult to model with any precision.
What the market does next depends less on Iranian posture in the next 48 hours and more on what the Bureau of Labor Statistics reports Friday morning. A strong August payrolls figure would push September rate-hike odds above 70 percent. A weak one might give the Fed enough cover to hold. Oil at $90 complicates either read.
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