Stock markets drop amid Middle East tensions as oil prices surge
US equity markets declined Monday as renewed fighting in the Strait of Hormuz between Iran and the US-led coalition raised concerns about economic disruption. Oil prices climbed above $110 a barrel, pushing mortgage rates to their highest levels in over a month.
Market Declines Tied to Iran War
Stocks have recovered a healthy amount intraday but are still down, with the Dow down 0.79% and Russell 2000 down 0.51%, while the S&P 500 is down 0.30% and Nasdaq down 0.14%. This week's trading session seemed off to a rocky start with reports that Iran fired on ships attempting to transit the Strait of Hormuz, and things became even more precarious after the United Arab Emirates issued a missile warning and is now intercepting missiles allegedly from Iran.
Energy and Mortgage Rate Impacts
Oil prices climbed slightly overnight, and the international benchmark Brent crude jumped further to above $110 a barrel after the dueling claims of the Iranian and U.S. Navy, with the national average gas price in the U.S. hitting $4.46. Average 30-year mortgage rates are back above 6.5%—their highest levels in over a month—as renewed tensions in the Middle East have rocked the bond market, averaging 6.52% on Monday, up 8 basis points, closely tracking the 10-year Treasury yield which jumped nearly 8 basis points to 4.45%.
Broader Economic Concerns
Other parts of the bond market are also getting hammered, a sign that investors are worried about the short-term and long-term implications of the war for the US economy.