U.S. stocks were mixed in early trading on Monday, with the Dow Jones Industrial Average falling by 180 points. The latest developments in the Middle East pushed oil prices higher, further fueling concerns over instability in the region. Later in the week, market attention will turn to the Nonfarm Payrolls report.

The Dow dropped 180.41 points, or 0.36%, to 49,318.86. The Nasdaq Composite rose 26.07 points, or 0.10%, to 25,140.51. The S&P 500 edged up 0.84 points, or 0.01%, to 7,230.96.

The situation in the Middle East remains a focal point. Conflicting reports emerged that Iran claimed to have attacked a U.S. warship in the Strait of Hormuz, though the U.S. military denied the incident.

Additionally, Iranian media reported that a vessel was driven away from the Strait of Hormuz.

According to reports, the Iranian navy stated it had prevented "American-Zionist" warships from entering the area. Another report claimed that two missiles struck a U.S. warship near Jask Island that had ignored warnings, though neither report has been independently verified.

Subsequently, U.S. Central Command posted on the social platform X that "no U.S. naval vessel was attacked."

Oil prices surged broadly on Monday. U.S. West Texas Intermediate crude futures rose 3%, trading above $105 per barrel, while the international benchmark Brent crude climbed 3%, surpassing $111 per barrel. Energy prices later retreated from earlier highs following news casting doubt on the Iranian reports.

In a Truth Social post on Sunday, former U.S. President Donald Trump announced a "Freedom Plan," stating it meant the U.S. would assist in "liberating" cargo ships from countries not involved in the Middle East conflict that were stranded due to the closure of the Strait of Hormuz. Trump wrote that the initiative was scheduled to begin on Monday.

Trump said in the post, "I have instructed my representatives to inform these nations that we will do our utmost to safely escort their vessels and crews out of the strait. In any case, they indicated they would not return until the relevant area becomes safe." However, Trump's post did not specify how this operation would be carried out.

Trump's announcement came after Iran stated on Sunday that it had received a U.S. response to its latest peace negotiation proposal.

Earlier reports indicated that Iran had sent an updated peace proposal via Pakistani mediators on Friday, boosting investor optimism about a potential resolution with the U.S. However, Trump later expressed dissatisfaction with Tehran's proposal, stating the country was only making an offer "because their military has been depleted."

Recently, investor optimism regarding the Middle East situation and a strong first-quarter earnings season have driven stock markets to new highs. Nigel Tupper, a strategist at Bank of America, believes there are still reasons to remain bullish.

Tupper wrote in a report to clients on Friday, "A robust global earnings cycle and several persistent investment themes continue to support returns in global equities."

Chris Senyek, Chief Investment Strategist at Wolfe Research, believes that strong earnings from the "Magnificent Seven" tech stocks will keep artificial intelligence as the market's dominant theme.

He wrote, "With solid earnings from big tech stocks adding more momentum to the AI theme, we think investors are likely to continue chasing established tech winners in areas like semiconductors and memory."

On Friday, both the S&P 500 and the Nasdaq Composite reached new intraday and closing record highs. The broader market index rose 0.29%, while the tech-heavy Nasdaq climbed 0.89%. In contrast, the Dow fell 152.87 points, or 0.31%.

The most important economic data this week will be the April jobs report, released at 8:30 a.m. ET on Friday. According to consensus estimates from Dow Jones, the U.S. economy is expected to have added just 53,000 jobs in April, significantly lower than the previous surge of 178,000, while the unemployment rate is projected to remain at 4.3%.