US stocks slump as utilities decline and energy gains offset losses

Wall Street started the week in the red on Monday as escalating military tensions between the US and Iran rippled through sector performance in opposite directions. Utilities took the hardest hit, while energy stocks were the lone bright spot, riding a wave of surging crude prices tied to fears of supply disruptions in the Strait of Hormuz.

The S&P 500 fell approximately 0.5%, the Dow Jones Industrial Average shed roughly 346 to 348 points (a decline of about 0.65% to 0.7%), and the Nasdaq Composite slipped around 0.3% to 0.5% in early trading.

Oil surges, utilities crater

Energy stocks climbed approximately 1% to 2%, making the group the only gainer on the day. The catalyst was straightforward: Brent crude surged more than 3% to above $90 to $91 per barrel, while West Texas Intermediate gained to around $86.

On the other end of the spectrum, utilities suffered the worst decline of any sector, falling around 1.2% to 1.6%.

PG&E shares plunged as much as 19.4%, a staggering single-session drop driven by lingering concerns over wildfire liabilities connected to a California Senate bill.

What sparked the selloff

The broader market weakness traces directly to renewed military exchanges between Washington and Tehran. After a brief period of relative calm, the US conducted airstrikes targeting Iranian missile launchers on Larak Island, a strategic position in the Strait of Hormuz. Iran retaliated with missile and drone strikes aimed at US-linked locations in Jordan and the United Arab Emirates.

August still in the green, for now

Despite Monday’s losses, the broader monthly picture remains positive. The S&P 500 was still up approximately 2.5% for August heading into the session.

For energy investors, rising oil prices are obviously good for earnings in the near term. Exxon, Chevron, and their peers tend to print money when crude sits above $85. But the source of those elevated prices, an active military conflict near major shipping lanes, introduces a level of unpredictability that makes position sizing a genuine challenge.

The utilities selloff, meanwhile, speaks to a different kind of risk entirely. PG&E’s nearly 20% drop wasn’t about Iran or oil. It was about California lawmakers and wildfire liability, a reminder that sector-specific regulatory events can be just as destructive to portfolios as geopolitical shocks.

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