Wall St dips as rising oil prices, hawkish Fed bets pressure stocks

On Monday, major U.S. stock indices experienced a decline following the escalation of military confrontations between the United States and Iran, which in turn pushed up oil prices. This rise in oil prices heightened inflation concerns following Federal Reserve Chair Kevin Warsh's previous week's hawkish remarks during his inaugural Jackson Hole address.

These losses may potentially set the precedent for September, a month that historically tends to be weak for equities, and could increase the pressure heading into the U.S. Federal Reserve's meeting next month. Traders estimate a more than 60 percent probability of a rate hike at the Fed's September meeting, according to CME's FedWatch, a significant rise from 41.4 percent a week prior.

This surge in expectations comes after Warsh's assertion that policymakers may have to raise borrowing costs if inflation fails to subside to the central bank's 2 percent target. Absent a substantial downside surprise, the expectation now falls squarely on Warsh to make a September rate hike. Otherwise, analysts at BofA Global Research warn that he might undermine some of the credibility he gained on Friday.

Warsh's comments, made on Friday at the Fed's Jackson Hole symposium in Wyoming, followed mixed data in recent weeks. Recent consumer inflation report indicated price pressures.