The Dow Jones industrial average fell 0.7 percent, the broad S&P 500 index retreated 0.3 percent and the tech-heavy Nasdaq composite index fell 0.1 percent.
The stock market decline follows the past 24 hours of attacks on Iran - the first confirmed American attacks since July - and Iran's response in the form of attacks on air bases in neighbouring countries.
It has also pushed up the price of oil. At the close, a barrel of North Sea oil cost just over $90, up from $88 on Friday.
Despite the decline, all three indexes are ending August with a monthly increase for the first time since May, according to CNBC.
