US stocks traded lower at midday on Monday, with crude oil prices surging after former US President Donald Trump announced he would reimpose a blockade on Iranian shipping through the Strait of Hormuz.
The Dow Jones Industrial Average fell 141.53 points, or 0.27%, to 52,495.48. The Nasdaq Composite dropped 289.24 points, or 1.10%, to 25,992.37, and the S&P 500 index declined 36.90 points, or 0.49%, to 7,538.49.
In a post on Truth Social, Trump stated, "We are reimposing the 'Iranian Blockade,' so named because it only stops Iranian ships or customers from coming in or going out."
He continued, "The United States of America will henceforth be known as 'The Guardian of the Hormuz Strait,' but as Guardian a 20% fee on all shipping will be charged for fairness to compensate for all costs incurred in securing this volatile part of the world."
Oil prices jumped following his announcement. US West Texas Intermediate crude futures rose more than 5%, surpassing $75 per barrel. The international benchmark Brent crude futures increased by 5.3% to $80 per barrel.
The announcement follows weekend strikes between Iran and the US. Tehran targeted US facilities in several Gulf states and declared the Strait of Hormuz closed, though Trump disputed that claim on Sunday, stating the critical waterway remained open to commercial shipping.
Trump had ordered airstrikes against Iran on Saturday, after Iran attacked a commercial vessel transiting the strait.
Ben Fulton, CEO of WEBs Investments, commented, "Until the Middle East is truly resolved, the market will stay rangebound."
Semiconductor stocks faced pressure. US-listed shares of SK Hynix fell 7%, after the South Korean chipmaker's stock surged 13% in its Nasdaq debut on Friday.
Micron Technology shares dropped 6%, SanDisk fell 10%, and Seagate Technology declined 6%. Additionally, Advanced Micro Devices was down 4%, as was Intel.
"I feel like some of the rotation has gotten ahead of itself," Fulton added, though he still views the AI trade as ultimately "still alive and well."
Major US bank stocks also moved lower ahead of their earnings reports this week, including JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and Wells Fargo. Quarterly results from Netflix, Johnson & Johnson, and UnitedHealth Group are also due.
Expectations are high for this earnings season. According to FactSet data, analysts on average forecast S&P 500 companies' second-quarter profits to grow by more than 23% year-over-year.
The June Consumer Price Index report is scheduled for release Tuesday morning. Economists surveyed by Dow Jones anticipate the headline data will show a 0.2% month-over-month decline but a 3.8% year-over-year increase.
Federal Reserve Chair Kevin Warsh is also scheduled to testify before the House Financial Services Committee on Tuesday regarding the central bank's semiannual monetary policy report.
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