Stocks fell on Monday as the latest developments in the Middle East sent oil prices higher, raising further concerns about instability in the region.
The Dow Jones Industrial Average fell by 564 points, or 1.1%. The S&P 500 traded down 0.5%, while the Nasdaq Composite fell 0.3%.
On Monday, the United Arab Emirates said it had intercepted a series of missiles fired from Iran. It is the first time the UAE’s missile warning system has been activated since the US-Iran ceasefire took effect last month.
Oil prices rose after that action. U.S. West Texas Intermediate crude futures rose 4% to trade above $106 a barrel, while international benchmark Brent crude futures rose nearly 6% to $114.
Energy prices had already risen earlier in the day after conflicting reports of an Iranian attack on a US warship and as Iranian media reported that the ship had been returned from the Strait of Hormuz.
Iran’s navy said it had blocked “US-Zionist” warships from entering the zone, according to state television reports cited by Reuters. A separate report by the Fars news agency said two missiles hit a US warship near Jask Island after it ignored warnings, although neither report has been independently confirmed.
US Central Command later wrote in a post on Xu that “no US Navy ships were hit”.
In a post on the Sunday Truth Social, President Donald Trump announced “Project Freedom,” which he said would involve U.S. assistance in “liberating” cargo ships from countries not involved in the Middle East conflict that have been stranded by the closure of the Strait of Hormuz. The initiative is set to begin on Monday, Trump wrote.
“I have told my representatives to inform them that we will make every effort to get their ships and crews safely out of the strait,” he said in his announcement. “In all cases they said they wouldn’t come back until the area was safe for navigation and everything else.” The president’s announcement on Truth Social did not detail how such an effort would unfold.
Trump’s announcement came after Iran said on Sunday it had received a US response to its latest offer for peace talks.
Earlier on Friday, Iran reportedly sent an updated peace proposal through Pakistani mediators, fueling investor optimism that a deal with the US could be reached. However, Trump said later on Friday that he was not happy with Tehran’s offer and that the country was only making the deal “because they don’t have a military anymore”.
“We don’t expect the war to be resolved quickly,” said Jay Hatfield, founder and CEO of Infrastructure Capital Advisors. “We don’t think Iran is going to get enlightened and get rid of its nuclear capabilities, so it’s probably going to have to happen by force, and that’s not going to be well received by the market.”
