U.S. equities opened sharply lower on Monday as escalating tensions in the Middle East pushed oil prices toward $100 a barrel, intensifying concerns that rising energy costs could pressure economic growth.
As of 09:43 ET, the S&P 500 declined 1.2% to 6,655.57, the Nasdaq Composite dropped 1.3% to 22,103.06, and the Dow Jones Industrial Average fell 1.4% to 46,846.08.
Wall Street had already ended the previous week on a negative note, with all three major indexes posting losses of at least 1% as investors grew increasingly worried that the widening conflict in the Middle East could weigh on global economic activity.
Oil surge fuels inflation and growth concerns
Monday’s selloff came as crude oil prices surged following an escalation in hostilities involving the United States, Israel and Iran over the weekend.
Brent crude futures for May delivery climbed 8% to $100.12 per barrel, while U.S. benchmark West Texas Intermediate rose 7.7% to $97.78 per barrel amid concerns about potential supply disruptions and risks to tanker traffic through the Strait of Hormuz, one of the world’s most important oil shipping routes.
The sharp rise in energy prices has renewed fears that a fresh oil shock could push inflation higher while also dampening consumer spending in the United States.
A prolonged rise in crude prices could complicate the Federal Reserve’s policy outlook by sustaining inflationary pressures even as signs emerge that economic growth may be slowing.
International Monetary Fund Managing Director Kristalina Georgieva warned that a sustained 10% increase in oil prices could lift global headline inflation by roughly 0.4 percentage points.
Speaking during a keynote address at an event in Japan, Georgieva said: “Think of the unthinkable and prepare for it.”
The market reaction also follows last week’s release of weaker-than-expected February nonfarm payrolls data, which raised fresh concerns about the strength of the U.S. labor market.
While Monday’s economic calendar is relatively light, investors are preparing for several key data releases later in the week. The U.S. consumer price index will be published on Wednesday, followed by the Federal Reserve’s preferred inflation gauge—the personal consumption expenditures price index—on Friday, along with data on job openings.
Iran names Mojtaba Khamenei as new supreme leader
The conflict in the Middle East showed little sign of easing after Iran named Mojtaba Khamenei as the country’s new supreme leader following the assassination of his father, Ali Khamenei.
Mojtaba, widely viewed as a hardliner and described by U.S. President Donald Trump as “unacceptable”, is expected to continue Iran’s confrontational stance toward Western countries.
Trump also commented on the surge in oil prices Sunday evening, saying the increase was an acceptable consequence of military action targeting Iran’s nuclear program, even as rising fuel costs began to affect U.S. gasoline prices.
Meanwhile, NATO spokesperson Allison Hart said Monday that the alliance had intercepted another missile headed toward Turkey.
Hims & Hers shares soar after Novo Nordisk report
In corporate developments, Hewlett Packard Enterprise is scheduled to release quarterly results after the close on Monday. Earnings from Kohl’s, Oracle, Dollar General and Dick’s Sporting Goods are also expected later this week.
Separately, Bloomberg reported that Novo Nordisk plans to distribute its weight-loss drugs through the telehealth platform operated by Hims & Hers Health, signaling a potential reconciliation between the companies after a recent legal dispute.
Shares of Hims & Hers Health (NYSE:HIMS), which have declined about 51% so far this year, surged more than 40% on Monday following the report.