Oil prices jump 5% after Iran drone strike; US stocks fall amid inflation and Fed rate hike concerns

US stocks dropped Monday following an Iranian drone strike on a UAE oil facility, pushing Brent crude above $114 a barrel. This spike in oil prices increased expectations for a Federal Reserve rate hike by March 2027. The Dow Jones fell 1.0%, led by transportation and travel sectors hit by rising fuel costs and competitive pressures, while energy stocks gained. The geopolitical tensions around the Strait of Hormuz and disruptions to oil exports are fueling market uncertainty and inflation worries, influencing bond yields and equity markets.