Oil Surges 5%, Stocks Drop as Hormuz Deal Hopes Fade

U.S. stocks edged lower on Monday as hopes for an imminent deal to reopen the Strait of Hormuz faded, while oil prices jumped about 5%. The S&P 500 declined 0.06% to end at 7,753.12 points. The Nasdaq Composite lost 0.32% to close at 26,605.36. The Dow Jones Industrial Average fell 0.11% to 53,976.04. U.S. crude oil settled at $82.13 a barrel, up roughly 5.1%. Brent crude futures rose 4.99% to $87.72 per barrel. The U.S. Strategic Petroleum Reserve's crude inventory fell to its lowest level since January 1983. President Donald Trump said the United States controls the strait and has swept it for Iranian mines. Trump demanded that Iran pay compensation for people he said it had killed in wars and protests. Iran's foreign minister said that as long as the U.S. continues to violate a June memorandum of understanding and does not compensate for its "violations," "it is impossible to resume negotiations". Iran also called for Washington to meet conditions, including recompensing Tehran for damage caused since U.S. and Israeli strikes on its territory more than five months ago. The decline in optimism over a resolution to the Middle East crisis fueled concerns over heightened energy prices that have spurred inflation worries and led to bets on interest rate hikes by central banks worldwide. Intel shares dropped 4.1% after the chipmaker announced plans to raise $15 billion through a public offering of common stock. Nvidia fell 2.9%. Apple declined 1.5%. The market moves followed a week in which the S&P 500 hit a record-high close, helped by stronger-than-expected earnings. Data on Friday showed U.S. employers unexpectedly shed 23,000 jobs in July, prompting traders to cut odds of a Federal Reserve rate hike in September. According to the CME FedWatch tool, traders now price in a 52% chance of a rate hike in September. About 85% of the 436 S&P 500 companies that have reported earnings so far this period have beaten estimates, according to LSEG data.