Wall Street started the new week on shaky ground. Stocks fell on Monday as the latest developments in the Middle East sent oil prices higher, sparking further worries about instability in the region. It was a sharp reversal of the record-setting momentum from the prior Friday.
Major Indexes Pulled Lower by Geopolitical Shock
The Dow Jones Industrial Average shed 557.37 points, or 1.13%, closing at 48,941.90. The S&P 500 slid 0.41% to end at 7,200.75, while the Nasdaq Composite lost 0.19% to settle at 25,067.80. The losses weren't uniform across indexes. The Russell 2000 gained 0.46%, showing some resilience in small-cap territory even as large-cap benchmarks pulled back.
This came just days after the S&P 500 and Nasdaq secured their strongest monthly performances since 2020, making Monday's retreat a notable shift in sentiment.
UAE Intercepts Iranian Missiles, Ceasefire Questioned
The catalyst behind Monday's selloff was a fresh escalation in the Middle East. The United Arab Emirates said Monday it successfully intercepted multiple missiles fired from Iran. Three "loitering munitions" were "intercepted over the country's territorial waters," said the UAE's Defence Ministry in a translated post on its official X account. The reported attack is the first time that the UAE has activated its missile alert system since the U.S. and Iran began a testy ceasefire on April 8. That fragile calm now appears under renewed strain.
Iran's Navy also said it blocked "American-Zionist" warships from entering the Strait of Hormuz, while another report said two missiles hit a U.S. warship near Jask Island. U.S. Central Command said that "no U.S. Navy ships have been struck."
Oil Spikes as Energy Stocks Buck the Selloff
Crude oil responded swiftly to the news. U.S. West Texas Intermediate crude futures rose 4.39% to settle at $106.42 per barrel, while international benchmark Brent crude futures were up 5.8% to end at $114.44.
Energy stocks bucked the broader market's downtrend on Monday. The S&P 500 energy sector climbed 0.6%, making it the only one of the 11 sectors tracking gains. APA led the sector higher, climbing almost 4%, while Diamondback and Marathon Petroleum followed with gains of nearly 3% and 2% respectively.
That divergence highlighted how Middle East conflict fears were reshaping sector performance, rewarding energy while punishing broader risk appetite.
Bright Spots: Earnings Beats and Deal News
Not everything was down. Global Business Travel Group surged nearly 60% following a report that Long Lake Management, a startup backed by General Catalyst Partners, is in advanced talks to acquire the company for $6.3 billion.
Seagate shares surged after the data storage company posted a blowout third-quarter earnings report, with shares of Micron and SanDisk also rising. Meanwhile, Circle Internet Group advanced after political developments with a crypto regulatory bill, which could benefit stablecoin issuers.
Also Read: Bitcoin Clears $80,000 Again as ETF Inflows Surge and a Golden Cross Looms
Conclusion
Monday's session was a reminder that geopolitical risk can override strong earnings momentum in a hurry. The U.S. stock market struggled to find its footing as investors digested a mix of escalating developments in the Middle East and bullish earnings reports. With the ceasefire looking fragile and oil above $106, markets will be watching the Middle East closely heading into the rest of the week.
Disclaimer: This article is for informational purposes only and does not constitute investment advice — always conduct your own research (DYOR) before making any financial decisions.