Wall Street closes lower as oil prices jump

US stocks declined on Monday as oil prices surged, reigniting inflation concerns and signaling potential tighter monetary policy. The Dow Jones Industrial Average slipped 0.70% to 53,185.90, the S&P 500 fell 0.33% to 7,686.14, and the Nasdaq Composite dropped 0.12% to 26,370.89. Despite broad market weakness, all three major indexes still managed monthly gains.

The Nasdaq led the way with the largest percentage increase for August, driven by continued interest in the AI sector. Fed Chair Kevin Warsh's hawkish remarks at the Jackson Hole Symposium heightened concerns about a potential September rate hike. Oil prices spiked due to ongoing tensions in the Middle East, particularly with Iran seeking a negotiated solution to the conflict and the subsequent closure of the Strait of Hormuz.

This led to heightened fears of energy price inflation, which could prompt the Federal Reserve to raise interest rates as early as next month. The energy sector saw the most significant gains, while utilities faced a setback due to a California Senate amendment addressing wildfire liabilities. GameStop experienced a 2.9% rise after announcing a debt exchange, while PG&E declined 20.1%, marking its largest percentage loss in over six years.