Oil supply jitters sent stocks sharply lower Monday after Iran's threat to cut its petroleum exports pushed crude prices over $73 a barrel.
Iran warned it would curtail distribution if Western nations punish or attack the country over its nuclear arms program. The heightened political tension unnerved a market already concerned that another severe hurricane season could devastate Gulf Coast refineries again. A barrel of light crude jumped $1.02 to $73.35 on the New York Mercantile Exchange.
An expected slowdown in the service sector did little to energize investors, who have grown hopeful that slowing economic activity would keep the Federal Reserve from extending its string of rate hikes. The Institute for Supply Management said its services index for May dropped 2.9 points to 60.1.
More up-and-down trading is expected in the coming weeks after last week's data on manufacturing activity and job growth provided little clarity on inflation and the Fed's plan for interest rates. Evidence of a moderating economy gave stocks some strength toward the end of the week, leaving the major indexes slightly higher.