U.S. stocks fell sharply on July 8 after President Donald Trump said he believed negotiations with Iran were effectively "over," triggering a 575-point drop in the Dow Jones Industrial Average, or roughly 1%, while the S&P 500 and Nasdaq each slipped 0.2%. Oil prices moved higher as investors reassessed the risk of renewed disruption around the Strait of Hormuz, a key shipping chokepoint that handles roughly a fifth of the world's oil supply. The sell-off marked a reversal from late May and early June, when U.S. stocks rallied to record highs on optimism around diplomacy. That optimism had centered on the June 17 Islamabad Memorandum, a 60-day memorandum of understanding (preliminary formal agreement) signed by the U.S. and Iranian presidents to create a framework for ending hostilities and reopening the Strait of Hormuz. Oman, Qatar and Pakistan helped broker the arrangement after facilitating talks throughout 2025 and into 2026, with discussions at one stage moving to Switzerland. By mid-July, hostilities had resumed, effectively undermining the interim accord less than a month after it was signed. By early August, Trump described the talks as a "last chance" for Iran, while Iranian officials said contacts were taking place through intermediaries rather than direct face-to-face engagement. The market impact was concentrated first in sectors exposed to energy prices, but the source says any prolonged disruption in the Strait of Hormuz could spread more broadly through global trade, especially for companies dependent on Middle East supply chains or stable shipping lanes.