US stock markets declined on Monday as investors assessed developments in the Middle East, following statements by the US President regarding the reinstatement of a blockade on Iran.

The S&P 500 Index fell 0.8% in New York, ending a two-day winning streak.

The technology-heavy Nasdaq 100 Index dropped 1.9%; Brent crude traded around $84 per barrel.

The US President stated that the US would restore a blockade on Iranian vessels transiting the Strait of Hormuz and demanded a 20% levy on all other cargo shipped through the waterway.

These latest developments further eroded market hopes for a peaceful resolution to the conflict, while rising energy prices reignited concerns about inflation and its potential to hinder economic growth.

A Federal Reserve Governor indicated that policymakers may need to raise interest rates in the near term if underlying inflation continues to show broad-based price pressures.

Technology stocks underperformed, weighed down by persistent geopolitical uncertainty and heightened inflation concerns. The information technology sector was the worst-performing group in the S&P 500.

"As global interest rates rise, investors are beginning to question the sustainability of tech-related spending, and the valuations of some tech and AI-related companies are once again coming into market focus," said the global investment strategy head at Wells Fargo Investment Institute.

In individual stock movements, SK Hynix ADRs fell 9.3%, pressured by renewed declines in South Korean artificial intelligence-related shares.

The US market faces a significant test this week with the release of several key economic data points and the full swing of the earnings season.

At the close, the S&P 500 Index was down 0.8% at 7,515.34.

The Dow Jones Industrial Average fell 0.3% to 52,498.64.

The Nasdaq Composite Index declined 1.6% to 25,873.18.

The Nasdaq 100 Index dropped 1.9% to 29,264.10.

The Russell 2000 Index decreased 0.8% to 2,953.166.