Dow Falls as Renewed US Strikes on Iran Near the Strait of Hormuz Rattle Wall Street to Close August

The Dow Jones Industrial Average fell Monday, dragging major U.S. stock indexes lower to close out August, after the United States and Iran exchanged fire for the first time in roughly a month, reviving concerns about rising oil prices and their potential impact on inflation.

The Dow traded at 53,181.62 as of 10:37 a.m. Eastern time, down 378.37 points, or 0.71%. The S&P 500 and Nasdaq Composite also opened lower, tracking similar declines earlier in the session, according to CNBC. The pullback came even as all three major indexes remained on pace to finish August with monthly gains, with the S&P 500 up roughly 2.5%, the Nasdaq 100 up about 3.8%, and the Dow ahead approximately 1.4% for the month heading into Monday’s session, according to Trading Economics.

The renewed selling followed confirmation from U.S. Central Command that American forces struck two Iranian rocket launchers on Iran’s Larak Island on Sunday, an operation officials said was aimed at rocket launchers preparing to deploy mines into the Strait of Hormuz. The strike marked the first publicly acknowledged U.S. military action against Iran in roughly a month, following a stretch of relative calm in the broader conflict between the two countries. Global benchmark crude prices rose about 2% at Monday’s market open in response, according to Bloomberg, as traders weighed the potential for renewed disruption to oil shipments through the strait, a waterway that has carried a significantly reduced share of global energy trade since fighting between the U.S., Israel and Iran began in late February.

Monday’s market reaction also built on hawkish signals from the Federal Reserve delivered at the end of last week. New Fed Chair Kevin Warsh struck a more hawkish tone than some investors had anticipated during his remarks at the central bank’s Jackson Hole symposium Friday, according to Yahoo Finance, contributing to a 0.3% decline in the S&P 500 that day even before Monday’s renewed Iran-related selling began. TheStreet Pro contributor James “Rev Shark” DePorre summed up the shifting mood among traders in a research note Monday. “The seasonal pattern is unfavorable, the Fed just leaned hawkish, and the momentum trade that carried this market has stopped working,” DePorre wrote, though he added that a more clearly bearish stance remained premature given the broader earnings picture and the calendar heading into the fourth quarter. “What keeps me from being outright bearish is the earnings picture and the calendar beyond September,” DePorre wrote, noting that October has historically served as what he called “the bear killer” given its tendency to mark seasonal market lows.

Weak domestic economic data added to Monday’s downbeat tone. The Chicago Purchasing Managers’ Index for the manufacturing sector came in at 47.1 for August, sharply below the Zacks Consensus Estimate of 58 and down from a reading of 57.6 in July, signaling a notable contraction in regional manufacturing activity. A reading below 50 generally indicates contracting activity in the sector.

Investors are now looking ahead to two closely watched pieces of economic data over the next two weeks that could further shape expectations for the Fed’s policy path: the monthly U.S. jobs report due Friday and consumer price index inflation figures scheduled for release next week. Those reports arrive at a moment when market volatility has begun ticking up from unusually low levels; the CBOE Volatility Index, known as the VIX, closed at 14.13 Friday, its lowest reading of 2026, according to Yahoo Finance’s analysis of AlphaSpace data, though the index has historically tended to climb through September and into October as markets move further from the summer’s typically quieter trading conditions.

Individual stock moves also factored into Monday’s broader market action. PayPal Holdings shares tumbled sharply after Bloomberg News reported that a consortium involving buyout firm Advent and payment processor Stripe had decided against pursuing an acquisition of the fintech company, according to Zacks Investment Research. Elsewhere, shares of India’s Adani Group dropped significantly amid a routine MSCI index rebalancing combined with volatility tied to a new trading mechanism introduced on Indian exchanges, according to Bloomberg, though that development had limited direct impact on U.S. markets.

Monday’s session marks the final trading day of August, and while the pullback tied to renewed Middle East tensions has weighed on sentiment to close out the month, all three major U.S. indexes remained positioned to post gains for August overall as of Monday morning, extending a broader upward trend that has persisted through much of the summer despite periodic bouts of volatility tied to geopolitical developments and shifting Federal Reserve policy expectations.