The S&P 500 fell 0.79% to 7,515.34 Monday after President Trump reinstated a naval blockade of Iranian ports, triggering a broad selloff across stocks, bonds, crypto, and metals. Tuesday's June CPI report reversed the move, showing headline inflation dropped to 3.5% year over year—well below the 3.8% consensus forecast—and lifting Bitcoin near $64,000 intraday. The softer inflation print shifted Federal Reserve expectations ahead of Chair Kevin Warsh's testimony before Congress Tuesday and Wednesday and the central bank's next policy meeting July 29.
Oil Prices Jump and Stocks Fall on Blockade News
President Trump announced the renewed naval blockade of Iranian ports Monday, with CENTCOM stating the action would take effect Tuesday at 4 p.m. ET. Iran's Islamic Revolutionary Guard Corps struck two United Arab Emirates tankers in Omani waters, killing one crew member, and Jordan intercepted four missiles fired from Iran.
Crude prices moved sharply on the blockade news. West Texas Intermediate settled at $79 a barrel, and Brent crude closed above $83, marking its biggest one-day percentage gain in more than six years.
Equities fell across the board. The Nasdaq Composite lost 1.55% to finish at 25,873.18, weighed down by chipmakers—SK Hynix fell 9% after its Nasdaq debut the prior week, and Micron Technology dropped 4%. The Dow Jones Industrial Average slid 138 points, or 0.26%, to 52,498.64.
Treasury yields climbed as traders priced in stickier inflation. The 10-year yield rose to around 4.62%, and the 2-year yield touched its highest level since early 2025. Gold fell about 1.4% to near $4,064 an ounce despite the geopolitical backdrop, as a firmer dollar and higher real yields offset safe-haven demand. Bitcoin dropped alongside equities, touching a Monday low near $61,700.
June CPI Report Reverses Market Sentiment
The Bureau of Labor Statistics reported Tuesday that headline CPI fell to 3.5% year over year in June, well below the 3.8% consensus forecast and down from 4.2% in May. The decline was driven mainly by a roughly 10% monthly drop in gasoline prices tied to a mid-June ceasefire that briefly reopened the Strait of Hormuz.
The softer print shifted expectations for the Federal Reserve's next move. Futures for the S&P 500 and Nasdaq rose in early trading. Bitcoin climbed back toward $64,000 intraday as traders unwound bets tied to Monday's risk-off mood. Gold and silver also advanced, with silver gaining roughly 2%.
Fed Governor Christopher Waller said Monday that a hot core inflation reading would push the central bank to consider raising rates soon. The Fed's target range has sat at 3.5% to 3.75% since June, and the next policy decision is scheduled for July 29.
Fed Chair Warsh Testifies Before Congress This Week
Federal Reserve Chair Kevin Warsh is scheduled to testify before Congress Tuesday and Wednesday as part of the central bank's semiannual monetary policy report, his first appearance on Capitol Hill since taking over as chair. Investors will watch his statements closely for any signal on whether the Fed sees Tuesday's soft CPI print as durable or as a one-month effect of falling gas prices.
The two-day swing shows how tightly oil, inflation data, and risk assets are now linked. Energy costs pass through to headline CPI fast, but the Fed's preferred core inflation gauge, which excludes food and energy, has stayed closer to 2.8% to 2.9%. Bitcoin and equities moved almost in lockstep this week, reflecting Bitcoin's continued high correlation to Nasdaq-style risk assets. Gold's Monday decline despite active fighting near a major oil chokepoint shows how rising real yields can outweigh safe-haven demand.
Investors now turn to Wednesday's producer price index, Thursday's retail sales data, and a wave of second-quarter bank earnings from JPMorgan Chase, Goldman Sachs, Bank of America, and Wells Fargo, all reporting this week. The blockade and the earlier Strait of Hormuz disruptions remain the biggest wildcard for markets—since February, Iran has largely blocked shipping through the strait, a route that normally carries about a quarter of the world's seaborne oil trade.
FAQ
What caused the S&P 500 to fall on Monday?
The S&P 500 fell 0.79% to 7,515.34 Monday after President Trump reinstated a naval blockade of Iranian ports. The blockade, effective Tuesday at 4 p.m. ET, triggered a broad selloff across stocks, bonds, crypto, and metals as traders priced in geopolitical risk and potential energy supply disruptions.
How did the June CPI report affect markets on Tuesday?
The Bureau of Labor Statistics reported Tuesday that headline CPI fell to 3.5% year over year in June, well below the 3.8% consensus forecast. The softer-than-expected inflation print lifted S&P 500 and Nasdaq futures in early trading and pushed Bitcoin back toward $64,000 intraday, reversing Monday's risk-off sentiment.
When does the Federal Reserve meet next?
The Federal Reserve's next policy meeting is scheduled for July 29. Fed Chair Kevin Warsh is scheduled to testify before Congress Tuesday and Wednesday, and his statements will be watched closely for signals on the central bank's inflation outlook and rate path.
