The S&P 500 fell 0.52% to 7,745.06 and the Nasdaq lost 0.32% as a U.S.-Iran ceasefire expired and negotiations stalled.
Brent rose 2.7% to $90.87 and WTI gained 2.6% to $84.50 after Iran ruled out extending the memorandum and an Iranian official warned of an offensive posture if diplomacy fails.
The 30-year Treasury yield climbed to its highest since June 2007 as higher oil added inflation pressure to the market selloff.
Micron bucked the decline with a 4% gain, while investors looked ahead to Fed minutes Wednesday and retail earnings from Home Depot, Lowe's and Walmart.
The pullback followed fresh S&P 500 records last week, showing how quickly Middle East risk has overtaken the earnings-driven rally.