The three major stock indices closed lower as geopolitical uncertainty from the Middle East escalated once again.

The Nasdaq fell by more than 1%, and the S&P 500 also declined by nearly 0.8%.

By sector, energy stocks rose 2% as they benefited from the surge in oil prices, while technology stocks fell by 2% and industrial stocks dropped by over 1%.

Amid military clashes between the United States and Iran, U.S. President Trump shocked the market by announcing plans to resume the naval blockade of Iran and impose a 20% fee on cargo passing through the Strait of Hormuz.

Expectations for a ceasefire in the Middle East collapsed, causing international oil prices to skyrocket by more than 9% in a single day, which led to concerns about fueling inflation.

Furthermore, Federal Reserve Governor Christopher Waller delivered hawkish remarks, stating that the central bank could raise the benchmark interest rate in the near term if inflationary pressures persist, causing bond yields to surge as well.

Investors are showing extreme nervousness over the possibility of the Fed raising rates again, ahead of the June Consumer Price Index (CPI) to be released tonight, Korea Standard Time, and the semi-annual congressional testimony by Fed Governor Kevin Warsh.

Meanwhile, semiconductor stocks led the market decline as doubts about the sustainability of AI investments combined with profit-taking selling.

The Philadelphia Semiconductor Index plunged 4.78%, while Intel also fell by over 6%.

Volatility is expected to continue until investors can confirm the upcoming economic indicators and actual corporate earnings throughout this week.