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Stocks fell on Monday but closed August in the green.

Stocks fell on Monday after tensions between the U.S. and Iran flared up again around the Strait of Hormuz.

The tech-heavy Nasdaq Composite dropped 0.12%, while the S&P 500 did so 0.33%. The Dow Jones Industrial Average underperformed, falling 0.70%. Longer-dated Treasury yields rose as well.

Oil prices rose at the same time. Brent crude, the international benchmark, rose almost 5% and stood above $90 a barrel at 3:26 p.m. ET, while West Texas Intermediate, the U.S. benchmark, climbed 3% and clocked in at $85.90 a barrel at the same time.

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Hostilities flared up again during the weekend after U.S. forces said they targeted two Iranian rocket launchers on Larak Island, claiming Iranian forces were getting ready to launch rockets carrying sea mines into the Strait of Hormuz.

"Last week, CENTCOM completed clearing sea mines from the strait's international shipping routes. U.S. forces are monitoring the area closely and remain prepared to protect the free flow of commerce through this essential waterway," U.S. Central Command spokesperson Tim Hawkins told CNBC.

Trump then threatened Kharg Island, from which about 80% of Iran's oil export are shipped, sharing an AI-made video with a caption claiming it was "being blown to smithereens."

Iran, in turn, launched missiles at U.S. bases in Jordan, local media claimed. Forces said they "destroyed the technical and repair infrastructure, as well as the enemy fighter deployment sites."

Iranian forces also said on Monday that a supertanker was disabled and caught fire after hitting two naval mines. The country's foreign ministry also said the U.S. bears "full responsibility" for the escalation that may follow the initial strikes. Axios reported later on Monday that Trump and aides have been considering limited strikes in the Strait of Hormuz to prevent Iran from rebuilding radar and missile capabilities.

Treasury Secretary Scott Bessent said the U.S. will further escalate economic pressure against Iran this week.

Speaking to The Associated Press, Bessent said the Trump administration plans to sanction another bank with ties to Tehran.

"This is going to be financial violence if we have to," he said. "We are showing people that we know who you are, you know who you are, and this has got to stop."