Oil Spikes Ignite Stagflation Fears: Wall Street Reacts

Wall Street indices drop as oil prices surge due to Middle Eastern tensions. Iran's appointment of Mojtaba Khamenei as supreme leader heightens geopolitical risks. Higher energy costs strain major stocks, while traditional safe havens face pressure. Central banks, including the U.S. Federal Reserve, are keeping a close eye on inflation triggers.

Wall Street's main indexes opened lower on Monday amid soaring oil prices, fueling inflation fears as tensions in the Middle East intensified after Iran's appointment of Mojtaba Khamenei as its supreme leader.

The surge in crude oil to just under $120 a barrel has worried investors. Despite attempts by G7 countries and Saudi Arabia to stabilize prices through increased supply, fears of stagflation have grown as the U.S. jobs market shows signs of weakness.

Travel stocks suffered further declines, while traditional safe havens like precious metals saw downturns as investors moved to the U.S. dollar. Defense sector stocks, however, bucked the trend and rose amid geopolitical uncertainties.

(With inputs from agencies.)