US stocks close lower amid uncertainty over US-Iran war

US stocks ended lower Monday as investors remained cautious following escalating tensions between Washington and Tehran over the weekend.

The Dow Jones Industrial Average slipped 0.01%, or 4.87 points, to close at 49,442.56.

The S&P 500 fell 0.24%, or 16.92 points, to 7,109.14, while the Nasdaq Composite lost 0.26%, or 64.09 points, to 24,404.39, snapping a 13-day winning streak.

The Volatility Index (VIX), often referred to as the market’s “fear index,” rose 7.95% to 18.87.

Investor sentiment remained fragile as markets assessed the latest developments in the US-Iran war, with traders reluctant to fully price in a worst-case scenario despite renewed regional risks.

Oil prices jumped sharply after US President Donald Trump said Sunday that Washington had fired on and seized an Iranian-flagged cargo ship in the Gulf of Oman. US benchmark West Texas Intermediate crude rose 5.3% to settle at $86.95 per barrel, while international benchmark Brent crude gained 5.2% to close at $95.05.

Trump said the vessel was under US Treasury sanctions due to what he described as a history of illegal activity, adding that the US had taken full custody of the ship and was examining its cargo.

He also threatened to destroy Iran’s power plants and bridges if Tehran refused to agree to a deal with Washington, as a ceasefire between the two sides is set to expire this week.

Meanwhile, Trump said Monday that the agreement under negotiation with Tehran would prove superior to the 2015 Joint Comprehensive Plan of Action (JCPOA).

The market reaction came despite Wall Street entering the week on strong footing, with the S&P 500 and Nasdaq having reached record highs last week after a ceasefire between Iran and Lebanon lifted sentiment.

However, uncertainty resurfaced after vessel traffic in the Strait of Hormuz became restricted again over the weekend. Iranian state media said the US had failed to meet its obligations, while Trump reiterated that the US blockade of the strait would remain in place until Iran accepted Washington’s demands.

European markets

European stock markets also closed lower Monday, with the pan-European Stoxx 600 index falling 0.82% to 621.46 points.

Germany’s DAX 40 fell 1.15% to 24,417.80, the UK’s FTSE 100 declined 0.55% to 10,609.08, and France’s CAC 40 dropped 1.12% to 8,331.05.

Italy’s FTSE MIB lost 1.36% to 48,207.02, while Spain’s IBEX 35 fell 1.21% to 18,260.90.